Category Archives: William McChesney Martin

I Take the Punch Bowl Away Just When the Party is Getting Good

Arthur F. Burns? William McChesney Martin? G. William Miller? Paul A. Volcker?

punch07Dear 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. Would you please explore this picturesque saying?

Quote Investigator: The earliest evidence known to QI appeared in a syndicated financial column called “Trade Winds” by Lou Schneider in October 1955. He discussed a speech delivered to the Investment Bankers Association about a week earlier by William McChesney Martin who was the chairman of the Board of Governors of the Federal Reserve System. Martin employed the vivid punch bowl metaphor. Boldface has been added to excerpts: 1 2

Mr. Martin owned up that the Federal Reserve “is in the position of the chaperone who ordered the punch bowl removed just when the party was really warming up.” But it was done because there are economic danger signals in sight. “If we fail to apply the brakes sufficiently, and in time, we shall go over the cliff.”

Martin definitely popularized this figurative language, and he was the speaker in the first known citation. Yet, it was not certain whether he originated this metaphorical framework. Special thanks to top researcher Barry Popik who located the above citation. His webpage on this topic is located here.

Here are additional selected citations in chronological order.

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Notes:

  1. 1955 October 25, Greensboro Record, Trade Winds: Credit Controls Policy Unchanged by Lou Schneider, Quote Page B9, Column 5, Greensboro, North Carolina. (GenealogyBank)
  2. 1955 October 25, Evening World-Herald (Omaha World Herald), Trade Winds: Talk by FRB Chief Explicit by Lou Schneider, (Consolidated News Features), Quote Page 32, Column 1, Omaha, Nebraska. (GenealogyBank)