Leo Melamed: If it’s good enough for Milton

Sure we were lucky. Sure our timing was great. Sure the idea was invincible. But the major difference was the paper written by Milton Friedman. It was the equivalent to an unvanquishable secret weapon. With it in hand, we criss-crossed the nation innumerable times, visited every nation on the planet, addressed audiences large and small, faced government officials, bank presidents, corporate treasurers, and the brokerage community and convinced them that a market in currency futures — a market in financial instruments — was an idea whose time had come. 

It was magical. For when we said the IMM was a great idea, the world yawned or laughed. When we told them Milton Friedman said so, the world took notice. When we were told, fixed exchange rates were coming back, we responded, Friedman said they are not! When we were told, Chicago is the wrong place, we responded Friedman is a Chicagoan! When we were told that we were crazy, we responded, Friedman is one of us! And each and every time his name made the difference! 

Throughout the years, this magic escalated. As his “Capitalism and Freedom” became the watchword for economic philosophy, as his logic on behalf of individual choice, free markets, and personal responsibility gained adherents, as his beliefs in individual liberty infused freedom around the globe, his name assumed near mystical proportions.

Presidents, finance ministers, central bankers, businessmen who would otherwise not have given us the time of day, or allowed us near their door, because of his name, opened the door for us. In the winter of 1975, Alan Greenspan instantly embraced our next iteration, Treasury-bill futures. He had read Friedman’s currency paper. When the CFTC required U.S. Treasury approval for the T-bill contract, at my behest, Milton Friedman telephoned William Simon, the Secretary of Treasury. Our contract was approved the same day. Milton Friedman rang the opening bell in January of 1976.

But perhaps the reaction of George P. Shultz is emblematic of the value of Milton Friedman’s paper and tells the whole story. Shultz was the first American government official I visited after the launch of the IMM’s currency market. He had just been appointed Secretary of Treasury. Secretary Shultz had no way of knowing that this was my first visit to Washington DC or that my knees were shaking as I entered his imposing office. Wisely, I had sent Milton’s feasibility paper to the Secretary before I arrived. There was very little conversation between us. Shultz listened to my explanation, smiled, and with a wave of the hand said, “Listen, Mr. Melamed. If it’s good enough for Milton, it is good enough for me.”

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