In December 1965, President Lyndon Johnson was pacing in the office at his ranch in Johnson City, Texas, while he waited for William McChesney Martin Jr., the chairman of the Federal Reserve Board, to visit for what Johnson called “a trip to the woodshed.” Two days before, Martin had led the Fed’s board of governors to an increase in the Federal Reserve discount rate, the first in more than five years of uninterrupted economic growth. Through Henry “Joe” Fowler, his Treasury secreatary, and Gardner Ackley, his Council of Economic Advisors (CEA) chairman, Johnson had advised Martin to delay the rate increase, and his instructions had been rejected. Few people ignored Lyndon Johnson’s instructions, and he was furious when he heard of the Fed’s move….
