Academic journal article Federal Reserve Bank of St. Louis Review

Eulogy for Darryl R. Francis, 1912-2002: Former President and CEO, Federal Reserve Bank of St. Louis

Academic journal article Federal Reserve Bank of St. Louis Review

Eulogy for Darryl R. Francis, 1912-2002: Former President and CEO, Federal Reserve Bank of St. Louis

Article excerpt

We are here today to celebrate a life well led. I am honored that Darryl's widow, Sherrian, asked me to speak this morning.

I came to know Darryl Francis personally just a bit in the final years of his life, after I moved to St. Louis four years ago. But long before then, I knew him very well by reputation, through many economists who worked at the St. Louis Fed during his tenure. As a consequence of my close tracking of monetary policy debates starting in the 1960s, I came to appreciate how extremely important Darryl was in this nation's monetary history.

Darryl was president of the Federal Reserve Bank of St. Louis from 1966 to 1976. To understand the importance of his role, I need to recount just a bit of the economic history of that period. Inflation began to rise in 1965, and year by year became an increasingly difficult problem for the United States until 1982. As president of the Bank, Darryl sat on the Federal Reserve's principal monetary policy body the Federal Open Market Committee. Over the years of his membership on the FOMC, his position was consistent and stated often with quiet eloquence. The issue was simple: to end the inflation, the Federal Reserve needed to slow the rate of money creation. Controlling money growth was and is the Fed's responsibility; no private party, no other organization can do it.

The FOMC did slow money growth in 1966, but not for long. Money growth and inflation rose in 1967. Subsequent policy tightenings in 1969 and 1973-74 were in each case followed by periods of excessive money growth. Inflation rose and became ever more intractable. In FOMC meetings, Darryl Francis spoke again and again against inflation and the money growth that was causing it. I know that personally because I've read the minutes of the FOMC for that period.

But Darryl did much more than speak against inflation and excessive money growth at FOMC meetings. With his research director, Homer Jones, he built a research division of first rank and encouraged research on the inflation issue. Francis, Jones, and the research economists were convinced that the analysis of the Chicago School of monetary economics, led by Milton Friedman, held the key to the inflation problem. Money growth had to be restrained, and consistently restrained over the long run.

The Chicago view is mainstream economics today, but it wasn't at that time. Darryl brought this analysis into the Federal Reserve System. More importantly, he brought the analysis to the general public through his speeches and argued the case to professional audiences through scholarly papers published by the Bank's research economists.

In speaking out, Darryl Francis took a public stance that required great courage. In plain terms, he said that the organization he worked for was responsible for creating and maintaining inflation. That was not a popular position at the Fed's Board of Governors in Washington, and I know that a lot of pressure was applied to try to get Darryl to be quiet. A great strength of the Federal Reserve System is that the 12 regional Federal Reserve Banks have substantial independence. Darryl Francis used that independence for this great cause of ending the scourge of inflation. He helped shape the public debate. The policies he advocated were not adopted during his term of office, but later they were the basis of the policies pursued by Paul Volcker, when he became Fed Chairman in 1979. These policies were understood by Ronald Reagan, without whose support Volcker could not have stood the course through the 1981-82 recession, at the time and still the most serious U.S. recession since the Great Depression.

Darryl's courage in addressing the inflation problem did more than contribute to solving it. His example inspired the work of the St. Louis Fed economists and led the entire Federal Reserve System to become a much more open organization. St. Louis came to be regarded as something of a maverick among Reserve Banks, and the Federal Reserve Bank of St. …

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