Effects of Divorce on Parents and Children

The first is that the outcomes of divorce will differ for different members of the family. Stresses, support systems, and successful coping strategies associated with divorce vary for husbands and wives, parents and children, and even among children in the same family. The means and ability for solving problems will diverge greatly in parents and children and in children of different ages. In addition, the needs and adaptive strategies of children and parents are not always compatible. The pathway to well-being for one family member may lead to a disastrous outcome for another.

The second important consideration is that divorce cannot be viewed as an event occurring at a single point in time; it represents an extended transition in the lives of parents and children. The point at which we tap into the course of divorce will to a large extent determine our evaluation of the effects of divorce. Some sequelae of divorce emerge rapidly following separation, some increase over the first year following divorce and then abate, and still others show a delayed emergence.

In conceptualizing the short-term effects of divorce, a crisis model of divorce may be most appropriate. In the period during and immediately following divorce, family members may be resounding to changes in their life experiences. In this period, stresses associated with conflict, loss, change, and uncertainty may be the salient factors. Research findings suggest that most family members can adapt to the crisis of divorce within a few years if it is not compounded by multiple stresses and continued adversity. The longer term adjustment of family members is related to the more sustained or concurrent economic, environmental, social, and emotional conditions that persist or are concomitants of life in a one-parent household.

Federal Open Market Committee

The employment of open market operations as an instrument of credit control disclosed the weakness of the procedure that permitted each Federal Reserve bank to buy and sell Government obligations at its own discretion. This could easily result in offsetting transactions, thus vitiating partially or totally their effect on the credit structure or even creating credit conditions directly opposite to those deemed desirable by the Federal Reserve banks located in the important financial centers. It became obvious that determination and execution of open market policy must be centralized to avoid conflicting action and confusion.

The law stipulates that "no Federal Reserve Bank shall engage in open-market operations...except in accordance with the direction of and regulations adopted by the Committee." The Committee has authority to direct all operations without the necessity of obtaining consent of the individual banks. The Federal Reserve Bank of New York operates the System Open Market Account, in which the twelve Federal Reserve banks participate according to an allocation formula which is based at present on estimates of each bank's expenses, dividends, and earnings for each year but may also be adjusted to changed reserve positions of individual banks. The New York Bank with the approval of the Open Market Committee appoints as Manager of the System Open Market Account one of its officers, who executes the Committee's policy through open market operations.

Repurchase Agreements

In addition to outright open market purchases the Reserve banks, at their initiative only, buy Government obligations (as a rule short-term and since early 1953 Treasury bills) under repurchase agreements from nonbank dealers in Government securities. The repurchase agreement is a sales contract in which the dealer obligates himself to buy back the securities at his or the Reserve bank's option any time within the specified period, usually not exceeding 15 days, at the same price plus interest for the number of days the securities are held by the bank. In practice it is a loan to the dealer similar to the advances made to member banks, except that the dealer cannot initiate the borrowing as is the case with the member banks. It is a method of supplying to the banking system temporarily needed reserves without the member banks' becoming indebted to the Reserve banks -- a condition which renders the former reluctant to make loans and investments.

Unlike open market operations, the repurchase agreement provides for automatic extinction of the reserves created through the purchase and for removal of the acquired securities from the portfolio of the Reserve banks. It is obvious that repurchase agreements can be employed successfully only in easing a credit stringency which is expected to reverse itself within a short period of time. The agreement also enables dealers to maintain and increase their position in Government securities in periods of tight money market conditions, when interest rates charged by the banks to dealers climb above the yields of short-term Government obligations.

FED Open Market Operations

Federal Reserve Act authorized the individual Federal Reserve banks to buy and sell in the open market

...at home and abroad, either from or to domestic or foreign banks, firms, corporations or individuals, cable transfers and bankers' acceptances and bills of exchange of the kinds and maturities by this Act made eligible for rediscount, with or without the indorsement of a member bank.... To buy and sell...bonds, notes and other obligations which are direct obligations of the United States or which are fully guaranteed by the United States as to principal and interest....

In the first years of their existence the Federal Reserve banks bought and sold in the open market bankers' acceptances for their own account and for the account of foreign central banks in order to develop a market for this credit instrument, to supply and withdraw reserves at their own initiative, to reinforce the credit control exercised through the discount rate, and to earn expenses and dividends. While the effort to build up an active acceptance market met only with limited success, it demonstrated to the Reserve authorities the potentiality of open market operations as a method of regulating the volume of bank credit.

Open market operations affect the total volume of reserves available to the banking system in a manner and at a time deemed desirable by the Reserve authorities. Although they cannot be directed to meet the requirements of specific banks, reserves supplied through open market purchases centered in New York quickly reach the banks that need them most, either through borrowing of Federal funds or sales of securities by such banks. The additional reserves are used by individual member banks to correct reserve deficiencies or to reduce their indebtedness to the Reserve banks. When individual banks do not need reserves, they usually lend or invest the acquired excess reserves to earn an income.

Open market purchases are likely to raise prices and lower yields of Government obligations. Owing to the large marketable public debt, the lower yield on Government obligations tends to affect other securities as well, resulting in a general decline in interest rates. Furthermore, the additional reserves may induce member banks, especially those located in financial centers, to lower interest rates on loans in an endeavor to employ the idle funds. Conversely, open market sales reduce member bank reserves, with the consequent tendency for interest rates to rise and security prices to decline. High interest rates discourage borrowing, especially flotation of long-term issues, and thus aid the Reserve authorities in their credit restraint policy.

As stated before, open market purchases have also been undertaken to support prices of Government securities even when such purchases conflicted with the credit restricting policy of the Reserve authorities.

Discount rate as an instrument of credit control

The Federal Reserve Act authorizes the Reserve banks to rediscount for member banks eligible commercial, industrial, and agricultural paper with a maturity at the time of discount not exceeding 90 days, except that for agricultural paper the maturity limit is nine months, and to make 15-day advances on member bank promissory notes collateraled by obligations of the United States or of Federal Intermediate Credit banks and of the Federal Farm Mortgage Corporation, and 90-day advances secured by commercial, industrial, and agricultural paper eligible for rediscount or purchase by the Reserve banks. This has been interpreted to permit the Reserve banks to make 90-day instead of 15-day advances to member banks since the latter are corporations. Large city banks usually borrow on 1-day notes, while the notes of country banks are of longer maturity but seldom run for 90 days, except in communities with predominantly seasonal business.

"Advances to member banks on the security of direct obligations of the United States are normally for short periods not exceeding fifteen days, and it is not the practice to make advances to others than member banks except in unusual or exigent circumstances." Interest is charged on a discount basis although these loans are called advances.

Eligible paper is defined by the Board of Governors in its Regulation A as follows:

...a negotiable note, draft, or bill of exchange, bearing, the indorsement of a member bank, which has been issued or drawn, or the proceeds of which have been used or are to be used, in producing, purchasing, carrying or marketing goods in one or more of the steps of the process of production, manufacture, or distribution, or in meeting current operating expenses of a commercial, agricultural or industrial business, or for the purpose of carrying or trading in direct obligations of the United States.

It must not be a note, draft, or bill of exchange the proceeds of which have been used or are to be used for permanent or fixed investments of any kind, such as land, buildings or machinery, or for any other fixed capital purpose.

It must not be a note, draft, or bill of exchange the proceeds of which have been used or are to be used for transactions of a purely speculative character or issued or drawn for the purpose of carrying or trading in stocks, bonds or other investment securities except direct obligations of the United States.

Because of the experience of the banking crisis of 19311933, the Federal Reserve Act was amended to authorize the Federal Reserve banks under rules and regulations prescribed by the Board of Governors to make advances up to four months to member banks on their notes secured by collateral satisfactory to the Reserve banks. The rate on such advances must be not less than ½ per cent per annum above the highest discount rate in effect at the time of the advance. Regulation A lists the kinds of collateral that may be accepted for such advances and provides that in addition a Federal Reserve bank may accept as security any assets satisfactory to it, if circumstances make it advisable to do so.

The discount rate is the rate of interest charged by the Reserve banks for rediscounts and advances. Since member bank borrowing is at the initiative of the banks, the discount rate by itself is not a potent instrument for regulating the volume of credit. Raising or lowering the discount rate affects the cost of obtaining additional reserves from the Reserve banks but not the total amount of reserves or excess reserves. While a higher discount rate may discourage borrowing from the Reserve banks -- the banks by tradition are reluctant to borrow from the Reserve banks, anyhow -- a lower rate will not induce the banks to borrow. Changes in the discount rate, however, tend to cause corresponding changes in rates charged by member banks and in open market rates carrying over into the long-term market, which in turn may encourage or discourage borrowing by political entities, business, and consumers. Moreover, changes in the discount rate signal to the institutions of the money market modifications of the Federal Reserve credit policy. An increase in the rate is interpreted as an indication that the Reserve authorities consider the volume of credit overexpanded and are adopting a tighter credit policy, and vice versa.

Furthermore, raising of the discount rate can be an effective means of restricting the volume of credit when it is preceded or accompanied by a rise in reserve requirements or by open market sales on a scale that would force the member banks to borrow from the Reserve banks or to reduce deposits by liquidating loans and investments.

Under these conditions the discount rate became more important as an instrument of credit control. In contrast to open market purchases, which increase reserve balances generally, discounts and advances place reserves immediately and directly in the hands of the individual banks that need them.

Quantitative Credit Control FED

The fractional reserve system, which permits the member banks as a group to expand the supply of credit by a multiple of the excess reserves held by them, and conversely compels a severalfold contraction of credit whenever reserves are reduced, enables the Reserve authorities to exercise control over the total volume of bank credit by supplying or withdrawing reserves.

The instruments of quantitative credit control are (1) the discount rate, (2) open market operations, (3) raising and lowering reserve requirements, (4) the float, and (5) moral suasion. The last tool can also be applied in qualitative credit control.

The common characteristic of the quantitative credit control instruments is the impersonality of their operations. Their use is not directed toward particular banks, certain types of loans and investments, or some segments of the economy; it affects rather the availability and cost of credit throughout the economy. Hence, their administration is less cumbersome and more flexible than that of selective controls and, moreover, is less exposed to political pressure from individual sectors of the economy.

The core of the Federal Reserve Act

The core of the Federal Reserve Act is the stipulation that member banks must maintain with the Federal Reserve banks statutory minimum reserves against their deposits. These required fractional reserves are the means by which the member banks are tied to the 12 Federal Reserve banks. The establishment of the Federal Reserve System in 1914 changed the concept of the principal function of legal reserves from that of providing liquidity to individual banks, i.e., the ability to meet withdrawals, to that of serving as an instrument for controlling the total volume of bank credit, the money supply, and interest rates.

The traditional view that the primary purpose of legal reserves is to assure adequate bank liquidity is obviously erroneous, since a bank can meet only a part of a withdrawal with legal reserves. A bank may draw on its required reserve and be temporarily deficient provided on other days it has excess reserves sufficient to bring the average amount held during the computation period (weekly for central reserve and reserve city banks and semimonthly for country banks) to the required ratio.

Hence, it may be stated that the liquidity of an individual bank rests primarily on its secondary reserve assets such as Treasury bills, other Government obligations maturing within one year, bankers' acceptances, commercial paper, and brokers' loans. These short-term credit instruments can be converted immediately or on short notice into cash without significant loss. The liquidity of the banking system as a whole, however, is based ultimately on the credit-expansion power of the Federal Reserve banks.

The required reserves are funds that the banks cannot lend or invest to earn an income. They represent a contribution by the member banks to enable the Reserve authorities to limit the volume of bank credit, and at the same time constitute a pool of reserve funds from which the banks can borrow in case of need. Since loans and investments create deposits against which the member banks must maintain stipulated reserves, the volume of reserves and the legal reserve requirements set a limit to the total loans and investments of the banking system. It is obvious that the lower the percentage of reserve requirements the greater the volume of credit and deposit expansion a given amount of reserves will support, and the greater will be the credit contraction necessitated by a reduction in the amount of reserves.

Nonmember banks tie up a smaller percentage of their deposits in reserves than member banks, owing to the generally lower reserve requirements imposed by many states and the permission to count vault cash as a part of reserves. Some states even permit investment of a percentage of the reserves in interest-bearing public securities. Moreover, nonmember banks are permitted to deposit their reserves with correspondent city banks, thus making the legal reserve serve simultaneously as the customary correspondent balance. On the other hand, a member bank must keep its legal reserve with the Federal Reserve bank and at the same time hold cash and maintain balances with its correspondents as needed. In contrast to the immobilized reserves of the member banks, reserves in the form of correspondent balances are not idle funds for the banking system since the depositary banks lend and invest these balances (interbank deposits), except for the fraction of the deposit which the depositary member bank must keep as a required reserve with the Reserve bank. This weakens somewhat the power of the Reserve banks to control effectively the volume of credit.

The functions of a world financial center

It will be useful to summarize the functions and prerequisites of a world financial center.

Such a center acts as a clearing house for a large volume and variety of international financial transactions. Under normal conditions it acts as a bank for the entire world and the services it renders facilitate the flow of goods, services, and capital among nations. Some of its functions are unique; others are closely comparable with those performed on a national or regional scale by domestic financial centers.

International payments cleared and often financed through such a center arise from a wide variety of commercial and financial transactions and take many different forms. For example, the exportation of coffee from Brazil to Belgium may be paid for either by means of a draft drawn in dollars on a New York bank, or with a bill of exchange in pounds sterling on a London institution. Also, payments of interest and principal on outstanding domestic and foreign obligations and of dividends are as a rule made through institutions located in a leading financial center.

Idle funds of various countries are usually transferred to such a center for employment, either by placing them on deposit with commercial banks at interest or by investing them at short term in money market media, such as Treasury bills or bankers' acceptances. Part of the gold and foreign exchange reserves of central banks of many nations is kept with the central bank or other large financial institutions of an international center. Foreign banks and corporations also maintain working balances there. The center is usually the headquarters of important corporations operating on any international scale as well as of firms engaged in international trade, shipping, and insurance.

Financing is provided for many types of commercial transactions and for long-term capital requirements. Bond and stock issues are underwritten and marketed. Seasonal needs for funds of various countries are met through the facilities of the center. Finally, the center is the seat of important securities and commodity exchanges wherein stocks, bonds, and the staple commodities of the world are bought and sold.

Just as an individual country may have a number of financial centers, so does the world at large. Although during the last decades New York and London have towered above all others, such cities as Amsterdam, Paris, Berlin, Zurich, San Francisco, and Shanghai have played important roles, varying greatly in different periods.

Specialized Institutions in New York - foreign exchange brokers and dealers

New York has many of the specialized institutions usually found in an international financial center. These include foreign exchange brokers and dealers, who formerly constituted a significant element in the foreign exchange market. It also has factoring companies and other financial organizations which buy accounts receivable arising out of foreign trade and engage in various other special types of transactions. Other New York firms directly connected with foreign trade and the international money market include numerous customs brokers, forwarding agencies, and export and import representatives.

Acceptance and discount houses, which accept or discount bills arising out of international trade, may play a considerable role in an international financial center. This phase of business has not been as fully developed in New York as in London. In New York the role of these institutions in international finance is of minor importance and at present the companies originally established to create and discount acceptances specialize in the buying and selling of United States Government obligations and commercial paper.

INVESTMENT BANKERS, BROKERS, AND DEALERS

A world financial center must also be a market for long-term capital. During the 1920's, New York was more of an international capital market than a money market. With the revival of international investment in the postwar period, the role of New York in this field has again assumed major importance.

The most important institutions of the capital market are the investment firms that originate and distribute securities. In the United States the houses which usually engage in the underwriting of foreign securities also play an important role in the domestic field. New York's investment banking institutions have substantial resources, experienced personnel, and well-organized channels for the distribution of foreign securities.

New York also has numerous brokerage and dealer firms which handle both domestic and foreign securities. Formerly, some of these houses were also active in international arbitrage in foreign exchange. Some engage in buying and selling foreign securities even when they are not listed on an American stock exchange. When the foreign exchange restrictions in the leading countries have been further relaxed, the activities of these houses will probably increase and issues of foreign corporations will very likely be listed on the New York Stock Exchange. The New York firms and banks dealing in Government securities also serve foreign clients.

INSTITUTIONAL INVESTORS

Another segment of the capital market is the large investing institutions. These include the life insurance companies, fire and casualty insurance companies, investment trusts, savings banks, and trust companies. In contrast with London, where such institutions in the past bought large amounts of foreign securities, most of the institutional investors in the United States are either prevented by law from acquiring such securities or may purchase them only in limited amounts. Some of the large institutional investors, however, are important buyers of Canadian and International Bank bonds.

LARGE CORPORATIONS

New York City is the headquarters for many large corporations that have substantial foreign interests. In making direct investments abroad, these companies transfer large sums to foreign countries. This applies particularly to companies in the petroleum, chemical, nonferrous metals, automobile, machine tool, and textile industries. The need for American capital goods abroad is very great and unless world political conditions deteriorate it may be assumed that many American corporations will broaden their foreign operations in the years ahead. This will increase the international activities of the financial institutions of New York.

SECURITY MARKETS

The broad and active security markets of New York contribute to its stature as an international center. Foreign capital is attracted to New York for investment, not only in the corporate securities listed on the New York and American Stock Exchanges but also in unlisted issues and in United States Treasury obligations. The transactions of foreign investors in United States security markets broaden considerably the scope of the New York capital market.

Foreign Banking Institutions in New York

Banks of different countries or dependencies had agencies in New York City in 1954. In addition, there are a number of banking institutions operating in New York which for all practical purposes may be considered as subsidiaries of foreign banks. They are chartered by the New York State banking department as New York State banks or trust companies and thus are permitted to engage in all types of banking activities. Practically all the large banks throughout the world have representatives in New York.

Foreign banking agencies in New York State enjoy many of the privileges of domestic institutions. They operate under licenses which authorize them to "transact in this state the
business of buying, selling, paying or collecting bills of exchange, or of issuing letters of credit or of receiving money for transmission or transmitting the same by draft, check, cable or otherwise, or of making sterling or other loans." These institutions are agencies rather than branches, the chief difference being that an agency is not permitted to accept deposits. Licenses are issued and renewed annually by the Superintendent of Banks "after such investigation as he may deem necessary." To obtain such a license, "the actual value of the assets of such corporation...must be at least two hundred and fifty thousand dollars in excess of its liabilities."

The foreign agencies engage in the financing of trade and other international transactions, especially those affecting the countries of their origin. They are large buyers and sellers of foreign exchange, particularly of the countries which they represent. They transfer funds from one country to another and act as agents through which their main offices place surplus funds in the New York market. They also buy and sell securities either for their own account or for the account of their main offices or their customers abroad.

Commercial Banks International Activities

COMMERCIAL BANKS

These are the backbone of any financial center. The resources of the commercial banks located in New York are greater than those of any other city in the world. All large New York City banks have well-established foreign departments and extensive correspondent relations with the leading banks of other nations.

The principal international activities carried out by the large banks are as follows: They buy and sell foreign exchange, finance international trade of the United States and of other countries, and extend credit to foreign banks in various forms, including letters of credit, reimbursement credits, acceptances, and straight loans, secured or unsecured.

They receive deposits, both time and demand, from foreigners: individuals, banks, corporations, and governments. The banks are paying and transfer agents for the securities of foreign corporations and governments and act as custodians of United States securities owned by foreigners. They maintain extensive credit files on foreign firms and individuals, and economic data on various countries, including laws and trade customs, which enable them to render assistance to their customers in international transactions. Finally, they issue transferable depositary receipts for foreign shares to facilitate transactions in such securities by United States residents.

The Federal Reserve Bank of New York

THE FEDERAL RESERVE BANK OF NEW YORK

This institution acts as agent for all the Federal Reserve banks in dealing with foreign central banks and governments. It is the correspondent of all the leading central banks of the world and at times also acts as fiscal agent for foreign governments. All international transactions of the individual Federal Reserve banks are under the direct control of the Board of Governors of the Federal Reserve System.

The principal international transactions of the Federal Reserve Bank of New York, both for its own account as well as for the other Reserve banks, may be summarized as follows: It receives deposits from foreign central banks and governments and from the International Monetary Fund and the International Bank for Reconstruction and Development, and may maintain deposits with other central banks.

It provides security custody accounts and earmarks gold for foreign central banks and governments and international institutions. It also buys for them bankers' acceptances and United States Government securities. The Bank buys dollar acceptances arising out of international transactions and, acting as agent for all Federal Reserve banks, makes loans to foreign central banks secured by gold. It can also buy acceptances stated in foreign currencies that have been endorsed by foreign central banks in order to provide the latter with dollar funds. It acts as agent of the Treasury in its foreign exchange operations and for all other governmental agencies engaged in international operations.

While the powers of the Federal Reserve banks are prescribed by law and are not as broad and discretionary as those of the Bank of England, they are sufficient to enable the Federal Reserve Bank of New York to play a key role in international finance.

New York's growth as a leading international financial center

New York's growth as a leading international financial center dates only from about 1914. Prior to that time, most of the international financial transactions of the United States were carried out through London, which had been for over a century the undisputed capital of world finance. The chief reasons for the rapid growth of New York as an international center were as follows:

1. The establishment of the Federal Reserve System in 1913, which, among other things, made possible the creation of a broad market in bankers' acceptances.
2. The outbreak of the First World War, which reduced the importance of most of the European financial centers and changed the United States from a debtor to a creditor nation.
3. The currency chaos prevailing in a number of countries, and the wide fluctuations of the pound sterling from 1919 to 1925, which made the old established financial centers unattractive.
4. The rise of the United States to the rank of the foremost industrial nation of the world.
5. The rapid growth of New York's financial institutions.
6. The acquisition of large amounts of gold by the United States, which gave the dollar a monetary backing unequaled by any other important currency.
7. The vast accumulation of capital and the favorable balance of payments of the United States, which made possible the export of capital from this country on a large scale.

All these factors combined made the dollar an important international medium of exchange and shifted to New York many financial transactions formerly carried out elsewhere. New York's history as a major international financial center may be divided into the following periods:

FROM 1914 TO 1921. This period was marked by a sharp expansion of the foreign trade of the United States and the emergence of New York as a leading international center. However, the collapse of commodity prices in 1920 caused a drastic decline in United States foreign trade, accompanied by severe losses sustained by financial institutions. The principal reasons for the losses were:

a. Inexperience with foreign credits and international transactions in general.
b. Overlending for speculative purposes, notably in commodities.
c. The depression which started around the middle of 1920 accompanied by the depreciation of many currencies and substantial losses in all financial centers.

FROM 1922 TO 1933. The second phase, too, was an unhappy one. Again it was characterized by large-scale credit expansion and an aftermath of heavy losses to American financial institutions, and this time to thousands of individual investors as well. It is noteworthy, however, that contrary to the general impression and despite the severe losses incurred in a number of cases, foreign investments made during this period eventually paid this country a substantial net return.This period was marked by: a. Unsound economic policies followed by the United States and by a number of other countries. Although during this period the United States became the foremost creditor nation of the world, it twice raised its tariffs to record high levels, thus making it difficult for foreigners to obtain dollars through exports for paying for imports from this country and principal and interest on their obligations outstanding in the United States. Other countries also adopted restrictive trade policies, partly in defensive retaliation against this country's actions.
b. Overlending abroad and disregard of the possibility of transfer difficulties. Many experienced bankers believed that an international transfer problem could not arise because an increase in interest rates by a central bank of a country on the gold standard would immediately attract funds from abroad. What was overlooked was the fact that American and other banks which had made substantial commitments abroad-in Germany, for example-might be unwilling to increase them, regardless of the rate of interest.
c. The existence of reparations and interallied war debts. It was apparent from the beginning that Germany would not be in a position to pay the amount of reparations imposed after World War I. Similarly, it was evident that the repayment of war debts to the United States could not be achieved unless the United States was willing to accept much larger quantities of goods and services from abroad or was willing to absorb a large volume of foreign securities indefinitely.
d. The extensive lending by American banks of short-term funds to foreign countries to finance their internal transactions, and the abuse of acceptance credit principles.
e. The abrupt cessation of foreign lending after 1929. This greatly aggravated the transfer problem and made financial difficulties inevitable for many nations.
f. The poor choice of investment risks, especially in the field of long-term loans, by inexperienced investment houses.
g. The sharp curtailment of American imports which accompanied the decline of business activity after 1929.
h. These factors intensified the world-wide economic depression and led to the abandonment of the gold standard by Great Britain in 1931, by the United States in 1933, and ultimately by the gold bloc countries under the leadership of France in 1936.

FROM 1934 TO 1941. This period was marked by some revival of international trade, by the gradual reduction of American direct investments abroad, by the huge inflow of foreign capital to the United States, chiefly in the form of gold, and by the establishment of bilateral trade arrangements which restricted the normal operation of the international money centers. From the official devaluation of the dollar on January 30, 1934, to the outbreak of World War II in September, 1939, there was a net inflow of gold to the United States of over $10 billion (not including $1.1 billion of earmarked gold), caused chiefly by the flight of capital from Europe. From 1939 until the enactment of Lend-Lease in March, 1941, large amounts of foreign funds flowed to this country to pay for war supplies.

Development of an International Financial Center

Many factors are essential to the development of an international financial center. First, there is need for a stable and sound currency system. A national monetary unit will not be widely used as an international medium of payment unless it is normally stable either in terms of gold or in terms of a number of other currencies. A large reserve of gold helps to maintain the stability of the monetary unit. Such a reserve creates confidence in the currency, since it can be employed directly by the central bank or through the operation of an exchange stabilization fund to minimize fluctuations in foreign exchange rates.

These results are achieved when the position of the currency is so strong that it is made freely convertible into gold or other foreign currencies which are, in one form or another, convertible into gold. This does not mean that the currency must be convertible into gold for domestic purposes. It does mean that foreigners, primarily central banks and treasuries, must be given the opportunity to convert their balances at a fixed rate into gold for exportation or into other currencies. This requires the existence of a free foreign exchange market. Foreign exchange restrictions seriously interfere not only with normal transfers of funds between nations incident to commercial transactions but also with arbitrage and other specialized activities which are common in an international financial center. Restrictions on foreign trade are also detrimental to the operation of a world financial center.

A second prerequisite is that there must be a substantial and constant demand for and supply of funds in the national currency of the country where the center is located. The demand and supply may reflect many different factors, particularly an extensive foreign trade, shipping and insurance services, willingness and ability to lend abroad, and willingness to receive on deposit foreign short-term funds. These factors not only narrow fluctuations but also render the national currency an international medium of exchange because of its worldwide acceptability in making payments between nations.

The balance of payments of the country in which an international financial center is located should be reasonably well adjusted over a period of time. Otherwise, the country either gains or loses gold in excessive amounts, and this may create disturbances not only in the money center itself but also in other countries.

Finally, an international financial center must be the seat of financial institutions capable of handling the business transacted in such a center. This requires the existence of large banks of international reputation with well-established foreign departments and with overseas branches, correspondents, and representatives. Usually, the center is the domicile of the principal office of the nation's central bank. There must also be a number of agencies or branches of foreign financial institutions that can perform their normal functions without being hampered by legal restrictions or discriminations. Also needed are specialized institutions which supplement the commercial banking system in financing foreign transactions. These include acceptance and discount houses, foreign exchange dealers, investment banking houses with international connections, brokerage firms, investing institutions, and insurance companies.Institutions such as these can be developed only gradually over a period of years.

Can Retirement Satisfy?

As our technology has become more efficient, fewer workers have been needed to do the work of the country, even though standards of living were rising and people were consuming more goods and services. When the depression of the thirties brought unemployment, the older workers were discharged first, and the Social Security Act was passed to give these people an income. Then World War II brought full employment and kept older workers on the job but did not modify the expectation that had been built up especially in big business and industry and in government and civil service--the expectation of compulsory retirement at a fixed age, usually 65.

Retirement is a new way of life. The elderly man who has filled his day with eight or ten hours of work must find new ways of living these eight or ten hours daily. His wife must also learn new living patterns, with her husband at home much more of the time. The person at retirement must learn to do without the things that his work has brought him; and his work has brought him more than his weekly or monthly pay.

For some people retirement is a goal toward which they have been working. It is the culmination of years of hope, sacrifice, and planning. For others it is a trap, a piece of bad luck for which they are unprepared. What retirement means to a person depends partly on what his work has meant to him. If he can get the satisfactions out of retirement that he formerly got out of work, or if he can get new and greater satisfactions in retirement than he got in his work, then retirement is a boon to him.

What does retirement mean in the life-cycle? Is it merely a narrow band of years coming at the end of a full life and ending in death, or is it a broad stretch of opportunity to enjoy one's self, to do things one always wanted to do?

In either case retirement is a new way of life and carries some problems with it. There are problems of leaving work--of finishing things off, of breaking off sharply or tapering off slowly, of deciding whether to look for another job or a part-time job. Then there are the greater problems of entering the new life. These problems consist of learning how to manage on a reduced income, how to use more leisure time, and how to get new satisfactions to replace the ones that went with work.

Today about one person in four over the age of 65 is employed. Very few of the women are employed. Less than half of the men are at work. But a number of retired people could be effective workers. Estimates of the number of retired people who are capable of doing productive work under present-day working conditions vary from about one and a half million to three million, from 12 to 25 per cent of the age group. All thirteen million persons over 65 are consumers. By 1975 there will be eighteen million people in this age bracket--all living on goods and services produced by the members of society who are at work. Our tremendous productivity makes this possible. But the cost is a real one. If more older people were productive, several advantages might be gained--older people themselves might live more comfortably, young people could be given more education before they commence work, people in the 20-65 age bracket might reduce their hours of work, or the whole society might have more goods and services to consume.

The economic cost of retirement to the nation will grow as the proportion of older people grows, unless we revise our retirement policies.

For the individual there is sure to be some cost to retirement, if only the loss of the income which he has been earning. In addition, most people get other satisfactions from their work, and retirement means the loss of these satisfactions unless they can find other ways of gaining similar satisfactions.

As the time comes when work is not a necessity for the whole of adult life, older people are most affected by the change in significance of work. The primary function of work as the means of securing income is beginning to lose its significance for older people. Less frequently does the veteran of forty years of work say, "I have to work to eat. How can a workingman retire?" A pension can answer that question for him. He has earned the opportunity to retire and to live for ten or fifteen years of comparatively good health free from work if he wants to.

If work had only the function of earning a living and this function was discharged for life by the age of 65, everyone should welcome retirement at that age. But other essential functions of life are included in work. If these functions and the satisfactions they bring are lost by retirement, then retirement is an undiluted tragedy for a man.

The problem of retirement is to secure the extra-economic values that work brings and to secure them through play or leisure-time activity. Can this problem be solved? Can play have the same functions as work? Can play provide the satisfactions to older people that they formerly got out of work?

In Western society, work is by cultural definition sharply set off as the enemy of pleasure, love, consumption of goods, and almost every sort of freedom. Work is a task defined and required of one by other people. This historical cultural definition of work is not valid for many of the workers. They have found other and more pleasurable meanings in their work.

Let us consider the extra-economic meanings of work and inquire whether leisure-time activity, play, or recreation also have similar meanings, and, if so, how the meanings of work can be realized in leisure.

Being with other people, making friends and having friendly relations with people, is one of the principal meanings of work to people in all the occupations we have studied. This function is also served by clubs, churches, recreation agencies, and a variety of formal and informal associations in the person's nonwork life. The pattern already exists; the problem is to fill the void created by loss of work associations in nonwork life.

Work is not intrinsically more satisfying than play as a source of meaningful experience. On the contrary, recreation offers more variety and more flexible opportunity for creative self-expression and interesting experience than work does. The person who makes a hobby of woodworking or pottery-making, or plays golf or bridge, "just for the fun of it," or travels or goes hunting or fishing, is getting the same values from his play as though he were doing work for the sheer enjoyment of the work itself.

Our studies of the significance of work in the lives of people underline for us the importance of an activity that fills the day, gives people something to do, and makes the time pass. Sheer passing of time seems to be an important value of work. Work is admirably designed to provide this value, since it usually requires orderly routines. Even the people who dislike their work as dangerous, unpleasant, or monotonous often recognize the value of the work routine to them and cannot imagine how they would fill the day if they were to retire.

Retired people work out a routine for themselves, reading the newspaper regularly, visiting the library every morning or at definite times, attending church, sitting in the park on pleasant days, working around the house in the morning, taking a walk downtown in the afternoon, going to a club or a tavern at regular hours. But many people have grown so accustomed to having their days organized about a job that they are ill prepared to create a new routine upon retirement.

Nevertheless, leisure-time activities can be organized and scheduled so as to fill the day and make the time pass happily. Play can be made to serve this function fully as well as work.

In a work-centered society such as ours has been in the past, work is certainly more effective than play in providing self-respect and gaining the respect of others. It seems unlikely that the present generation of older people reared with work-centered attitudes can get much self-respect out of leisure-time activities. Most of them, if they are forced to retire, will maintain their own self-respect and the respect of others by their reputation as successful workers and their feeling that retirement is a reward for a well-spent lifetime of work.

Women, however, have mostly gained their self-respect and the respect of others through being good mothers and housekeepers and neighbors. Women who have not been employed will usually be able to draw on the sense of worth and social prestige as they grow older that they discovered in their middle years.

Thus we see that leisure activities can conceivably offer the extra-economic meanings and values which work has supplied to people. This is fortunate, because leisure is on the increase at all adult years. A good many people now work forty hours or less a week, which is only a little more than half of the average work week a hundred years ago.

To Retire or Not

The majority of younger executives said that they would want to leave their companies at normal retirement age. Most of them expressed the feeling, "I'll welcome retirement; just give me the chance to get away from this business pressure." Only a small proportion of these men added the cautionary proviso, "If I have enough money." The fact that twice as many said they would prefer less rigorous company assignments as said they would want to remain on a full-time basis is also an indication of an expressed desire to lessen business pressures. The "similar" or "different" work they said they wanted for post-retirement activity was usually described in no more than general terms. On the other hand, hobbies and recreational-cultural activities were mentional enthusiastically and definitely as occupations. This enthusiasm was somewhat less pronounced among those who looked forward to public-service assignments.

In contrast, the majority of older executives wanted to continue with their companies because the alternative of retirement simply did not seem so attractive to them. Realization of the personal satisfactions they obtained in business was impressed on this group as they contemplated leaving their companies; the disadvantages of pressure all but disappeared from their minds. They placed new importance on the business and social recognition provided by their jobs.

There was anticipation of a loss of prestige and standing inherent in a change. This feeling was especially true among those executives who had achieved their job ambitions relatively late in their business lives. It seemed more prevalent, also, among men who had no more than a vague idea of their post-retirement programs. Over-all, the executives who said they wanted to continue with their companies looked with disfavor on "retirement from" and lacked a concept of "retirement to."

The Retirement Myth

It is obvious that instinctively the worker has deep inner resistance to withdrawal from work. The evidence accumulated by geriatricians ad psychiatrists amply indicates that retirement is frequently followed by crisis and severe emotional disturbance, sometimes even by death.

Why this resistance, why this inner conflict? Why the reluctance to accept benefits offered? Unfortunately, modern psychology has not given adequate attention to this question. Perhaps some suggestions of the answer can be found in a footnote in Sigmund Freud Civilization and Its Discontents. Freud writes:

When there is no special disposition in a man imperatively prescribing the direction of his life-interest, the ordinary work all can do for a livelihood can play the part which Voltaire wisely advocated it should do in our lives. It is not possible to discuss the significance of work for the economics of the libido adequately within the limits of a short survey. Laying stress upon importance of work has a greater effect than any other technique of living in the direction of binding the individual more closely to reality; in his work he is at least securely attached to a part of reality, the human community. Work is no less valuable for the opportunity it and the human relations connected with it provide for a very considerable discharge of libidinal component impulses, narcissistic, aggressive and even erotic, than because it is indispensable for subsistence and justifies existence in a society. . . . And yet, as a path to happiness, work is not valued very highly by men. They do not run after it as they do after other opportunities for gratification.

Let us first consider Freud's remark in the earlier part of this passage: "Laying stress upon the importance of work has a greater effect than any other technique of living in the direction of binding the individual more closely to reality; in his work, he is at least securely attached to a part of reality, to the human community." To the economist, work may be only a way of earning a living, but to Freud it is more, much more. It is also a way of life. For the average man, it is the bond with reality, the means of communal contact and participation. It serves to identify the individual with society, past, present, and future. It functions as a high form of sublimation, helping to make out of man a social, a civilized being. That is why forced retirement usually precipitates such a severe emotional crisis: it is nothing less than the rupture of the pattern that has hitherto given meaning and value to life.

With the rise of trade unionism, millions of workers have been able to achieve a wider sense of belonging than even their work has succeeded in conferring upon them. The union gives the worker added stature in the community. Through his union he asserts himself as a person. Through collective bargaining, he becomes a partner in industry. From time to time, he demonstrates his power by using his collective strength to improve his lot in life. As a union member, he becomes a major contributor to philanthropy at home and abroad. He exercises influence in his community. He becomes an important factor in politics. The newspapers note his actions and make him part of history. Forced retirement means isolation from the labor collectivity and a collapse into individual insignificance. No wonder it is felt to be so dreadful by most workers threatened with it.

It will be noted that in the passage I have cited, Freud observes that "as a path to happiness work is not valued very highly by men. They do not run after it as they do after other opportunities for gratification." This conclusion is of course based on European experiences and does not altogether represent the attitude towards work in our culture. I have, however, found a distinct difference in attitude towards work between the older and the young worker. In my own rather amateurish survey of the attitude of workers to forced retirement, I have found two quite contradictory reactions: older people want to continue working and shy away from retirement; but strangely enough it is the young to whom retirement appeals. Why this curious difference in attitude? I venture the following as a possible explanation. Every young person starts life with illusions about himself. He believes he can, and hopes he will, do something great. Usually, he does not admit to himself the illusory element in these dreams, but as he gets on in life, he necessarily adapts himself to reality and goes about earning his living as best he can. Yet he does not give up the hope of attaining his secret aims. Some day, he keeps telling himself, he will get the chance, and when anyone comes to him with a scheme by which he will some day be able to retire and do the things he has always wanted to do, he welcomes it. As he grows older, however, and begins to approach his retirement age, he begins to realize that what he hadn't been able to accomplish at 25 or 30, he is not likely to do at 65; and the very hope that once led him to look forward to it now makes the prospect of retirement quite distressing--because he knows that once he retires he will have to admit to himself that his great expectations were always largely illusory. Thus, the paradoxical attitude of the young man, if examined a little more closely, really confirms the analysis I have been trying to develop.

It is generally recognized that the happiest people are those fortunate few, who, through a combination of special faculties and inner drives, become the great creative artists, scientists, philosophers, and statesmen of their time. These men do not retire; their work is their life. They frequently live to a ripe old age and remain active to their very last breath. The great mass of people are not quite so fortunate. Most of them are forced to accept work not to their liking, but, even so, work becomes the bond between them and the community, between them and social reality. It constitutes their main social function and creates that sense of belonging without which life is hardly livable.

This is especially true of our American culture. Our entire educational and social pattern emphasizes a man's place in the working community. It is dinned into us from the start that we must be useful citizens, that we must do our share of the work, that we must make our contribution to society. The conventions of our civilization demand that a man either make money or earn money. He does not truly "belong" unless he is usefully employed, in the broad sense in which our civilization views usefulness. The playboy is looked upon with contempt because he is a stranger to man's normal activities. Yet the forced retirement idea is based on the conception that a man who has been taught all his life that he must be socially useful through work can make a sudden transition to idleness and still retain his self-respect. This notion is dangerously false. His very youthful hopes, as we have seen, now operate to intensify the fear of forced retirement. The realization that the things one had always dreamed of doing to establish oneself in the eyes of society are nothing but illusions tends suddenly to deflate one's self-esteem and to precipitate a serious emotional crisis.

What do we retire to?

Our answer to this question begins where we are and it extends to the time--forewarned by our retirement--when we shall not be at all. Let us reverently survey our remaining life and let us serenely contemplate our death. We have earned the right to be candid with ourselves, and we perhaps owe it as a duty to tell one another the truth. The larger truth is that retirement is prelude to what Crowfoot, leader of the Blackfoot Confederacy, described in these quiet but moving words:

A little while and I will be gone from among you, whither I cannot tell. From nowhere we come, into nowhere we go. What is life? It is a flash of a firefly in the night. It is the breath of a buffalo in the winter time. It is as the little shadow that runs across the grass and loses itself in the sunset.

That truth we had better assume than unduly to presume upon increasing longevity. Certainly we will not live forever. And yet, mortality has given me no commission from either God or man to preach about it. But even a retiring teacher may think out loud about human destiny, letting his slips of speech fall where they may. I see that you are not only retiring but are also getting old; and I know what that eventually means. I can see it in you better than you can see it in yourselves. It is pervasive in men and women of our generation. I have never gone to but one of my college class reunions, and I'll never go to another. I was utterly embarrassed by the way classmates flaunted every sign of decay from arthritis to garrulity. I could not tell them without cruelty, but I can now say for truth's sake, that I was literally the only one of them whom the years had passed over and left young. But let us to the answer of our question, moralizing only in proper places as we go along. Whither our retirement?

Memory of the honorable estate from which we retire is the first treasure-trove to which we retire; for memories will go with us to the end of our days and will often, "in vacant or in pensive mood," as Wordsworth says,

. . . flash upon that inward eye
Which is the bliss of solitude.

More of solitude, and then more and more of it, we will have from here out. A dear friend, who is eighty-six, tells me that this is what has touched him closest about age: that be has outlived those who had a community of memories, and that communication becomes more and more difficult and thin. We shall all be further and further reduced to our own thoughts. Our legacy will probably grow richer for us in recall than it was in transaction.

Recall is, then, the first of our beads which we shall tell in retirement. With warm memories we have meat to eat that mere worldlings know not of; for, as Emily Dickinson says:

It may be wilderness without,
Far feet of failing men,
But holiday excludes the night
And it is bells within.

The next of our beads is a larger leisure in our second childhood than we have known since our first childhood. Little leisure have we known in fact, despite our limited hours of teaching. We have grown tired and yet worked on through passing days and well into many a night. And this has happened to us so continuously that on romantic rebound we have made a heaven of leisure, a heaven nobody could stand for a week once he got rested up. Mark Twain found this out through Captain Eli Stormfield's experience in the Hereafter, found out, I mean, that sittin' on a cloud-bank with a halo that got heavy, with wings he could not maneuver, and with a harp which he could not coax beyond a single tiresome tune--that such a heaven was no fit place for a grown man, who requires oscillation between the opposites which in his character he houses.

Next to forgetting the first law of imagination, that in the realm of fancy anything may mean anything, is a forgetting more fatal still to our happiness: namely, that satisfaction expands only into satiety--or back again to lack and want. It is clear to any thoughful man that leisure must be informed with appropriate endeavor. It itself is not enough to fill retirement to the full.

It is not enough, but it is something; and we shall now get our first full-sized dose of it for many a busy year. I, for one, mean to make the most of whatever leisure I actually find lurking around my trailer door. It will be good to loll at breakfast after having turned over for another snooze. It will be good to play a little at last, even to indulge in scrabble, for instance. I have never had time for it. An older friend has accused me, because of this lack, of what he calls "the great Un-American Inactivity." It will indeed be good to slow the pace and do a little plain and fancy sauntering, whatever form it take. Justice Holmes says, with his eye upon senescence, that "the riders in a race do not stop short when they reach the goal. There is a little finishing canter before coming to a standstill." This our new-found leisure will afford for each of us, "a little finishing canter" as the day dies away.

But what, after all, is leisure save unpressured work? Clearly idleness for such as we is odious. So I count as my third bead self-rewarding work that is freely chosen to fill the leisure hours. We will, of course, keep on doing what we have been doing, but not so much of it. And let us not kid ourselves, as we cannot kid each other, that the quality of our output will be proportioned to the quantity of leisure now at our disposal. If you have long spent more time dreading to write or grade papers or mend the leaking faucets at home than you have in doing the job; if you have made excuses all your life for not doing proudly what you were paid to do; if you have chronically waited to do your best until there was nothing else to do--then you will hardly bloom out now as editors' models, registrars' pets, or other Beau Brummels of senescent virtue.

That masterpiece of research you've put off to retirement you'll likely now in further easy stages put off to eternity. I'll not bet even on your stopping smoking now that you have nothing else to do, when you couldn't stop before this because you had everything else to do. Walter Mittys will be Walter Mittys.

Every year our accumulated character gets more and more the best of our resolutions, and surrender to habits of inefficiency or of selfexculpation becomes the visible stigmata of our fate. "There," said the sot from the gutter, as he watched the successful man whirl by in a Cadillac, "there but for me go I." This dominance of habit holds hardly less of virtue than of vice. When the normal lethargy of age has had its way with our dwindling resolution, we shall in our new-found leisure be mostly doing less and less of the more and more we have promised ourselves to do. This continuity of character is a small enough boon for retirement; but it is something to know that we can, and probably will keep on doing the same we have been doing, in diminishing degree. In that way we won't be slipping up on ourselves. Let us put it down, then, as a law of our nature and the arbiter of our fate, that we shall not do much which we have not been doing, and shall do less and less of what we have been doing. This reliance upon character I count as my third authentic bead.

Let it, however, be the fourth bead of our rosary for old age that we can and probably will do something, a little, of the different. Surely we have all promised ourselves that come retirement and leisure, we would do something "worthwhile"--and little doubt each has dreamed therewith of innovation. Seldom is the labor of our livelihood wholly self-rewarding, and retirement is a chance to even accounts with ourselves before we die. . . .

That is the fourth of my beads: our ability to do something of the different to bemuse our new-found leisure.

The fifth of my beads comes so close to branding me a "do-gooder" that at the expense of arousing suspicion I wish to forfend myself of the accusation. To be a do-gooder is, as you must know, something semiheinous in our generation. But to do more good than we have done is still a general aspiration, and one quite honorable. But do you know the difference here involved? The doer of good does something with people; the do-gooder does something to people. The do-gooder makes "easy simplicity of lives not his own." No do-gooder does so little good as an old do-gooder. When you have not saved the world in sixty-five years, you will hardly save it in the remaining years, not even if you redouble your effort to make up for bedimming goals.

On Being Retired

Since the time when the memory of man runneth not to the contrary, our Western civilization has been dominated by two images: the travel and the fight eidola, both of which are hostile auspices for the respectability of age. Both are refulgent with light for the paths of youth and middle age. Migrating from different tribal centers, men have historically met one another in various parts of the globe. To travel far was always to meet; and to meet was sooner or later to fight; for those who are met at the boundary are barbarians, each to the other. The only thing to do to barbarians is to fight them, and if possible to annihilate them. To annihilate them we have not been able; but in fighting them we have all done our share. Children of migratory ancestors, we sophisticated simians dream of traveling even when there is no further place to go; and children of warriors, we dream of fighting even when our arms have been thrown away. Our poetry is warlike--Homer, Milton, Shakespeare--and our fiction--Tolstoy, Hugo, Hemingway--goes forward in the haze of battle. Because of the sheer hardships of travel and the harsher incidence of war upon vital statistics, as well as the backwardness of science, men have not historically lived to be old. When by chance they did, they supported themselves on errands in a self-supporting family group. Poorhouses were few, and were for the uprooted and the piteous. A worn-out pedagogue could not respectably go to the poorhouse; not even yesteryear.

So much so has our past been of traveling and fighting that if the news were suddenly broken to our subconscious that the migratory days of humanity are over, that indeed there isn't anywhere else to go, few of us would know what to do with ourselves--until we happened to bethink ourselves, with our television children, of the moon or Mars. The mind can keep up an occupation which the body has long since discontinued. We can and we do make life itself a "pilgrimage" and the competition of virtue we transform into a metaphysical fight. "Onward, Christian soldiers, marching as to war." This is what I mean in saying that we are a journeying troupe, dominated by these two ancient eidola.

Symbolic of our culture, to the point of utter neatness, was the couple who met Orson Welles's cosmic scare by rushing out of the house with their suitcases hastily packed! Whether our fighting days are as passé as our migratory days remains to be seen. Certainly, the travel image remains lustrous long after it ceases to be functional. But if we continue to fight, we'll hardly continue to travel; for there won't be many of us left-and we'll be busy picking berries outside our mountain caves. Either way, it is the dominance of images which today we still have mightily to contend with.

Now these concrete images--of travel and fight--achieve abstract form in our philosophies of life. I have spoken already of our career-line itself conceived as a pilgrimage from this to a better (or worse) world. The political emphasis of modern times (both of democracy and of communism) upon equality envisages a leveling-up, never a final downgrading. I hesitate to think what our loyalty to equality might prove to be if through misfortune the only transformation possible should come to be a leveling-down.

Diverse though our individual philosophies of life be, our Western philosophy of history has concentered upon the notion of progress. That apostle of modernism, John Dewey, has gone so far as to say that if there be a single moral end, that end is "growth." Justice Holmes writes to Sir Frederick Pollock--one octogenarian to another--that the death of the aged does not grieve him. They've had their day, he says. But the death of the young is grievous: it is tragic, he adds, to die before you have had a chance "to try out your powers." The emphasis upon growth is clearly the ideal which befits youth and those still rising to a climax of their capacities.

This leaves anomalous those of us who are on the decline. Growth reached, what then? Well, then the call would seem to be for one to surcease. Why worry about a falling star in a rising world? But the doctors won't let us older people die, short of suicide; and the theologians won't let us commit suicide with dignity and proper peace of mind. How to be old and still to be respectable becomes a question for all who are well past their prime.

At the mercy, as we are, of both medical men and the medicine men of the race, we aged must keep on being, and being for a longer and longer time. But we are anomalous even as we grow more numerous. From our situation arise many problems. There is a sociological problem, but that we leave in a specialized age to the sociologists. There is an economic problem but we don't want the economists to be without a job. There is a political problem, especially in Florida and California; but why should we do the politician's work? He's paid, or pays himself, to do it. None of these problems represent, I suspect, what we as "retiring" individuals are most interested in. We're not interested in merely existing; we want to go on living as people who matter. The problem-mongers would turn us into "cases" long before we have ceased to be persons.

Shall we, then, like another ancient of days, live to preside at the funeral of our own reputation? We are quite willing to retire. Certainly I am. And all the more because I find myself of late, in the heat of lecturing, forgetting what the lecture is about and even forgetting what the subject of the sentence is to which I am vainly and publicly trying to hitch a predicate. I can see that for me to get out would solve problems for those anxiously awaiting signs of my dotage; but to solve their problems does not properly dispose of me.

It is quite a situation we are in, and it deserves a large-minded survey. It is not merely that our culture is, as I have said, dominated by the images under which we aged can play little constructive part. It is not merely that we lived in a period which glorifies beauty and prematurely casts able-bodied men, and even more so women, upon the heap. It is that we lack a philosophy which makes old age respectable and which would prevent the normal process of decay and death from appearing as a surd in the life of reason.

To call it a day, however, does not automatically ring down the night. There is still work to be done and light, albeit failing light, in which to do it. Certain vital juices still course through the gnarled trunks of many of us, albeit they course more gently than before. Or, to change the figure, when the old fire horse hears the bell, he may still involuntarily flex his muscles and even try to trot alongside the steaming steeds. . . .

This Question of Retirement

Anthropologists long ago recognized that in many primitive cultures there were fixed points at which individuals passed from one age-status to another: the child passes into puberty, the adolescent into manhood or womanhood, the active adult into the elder. Each of these transitions was marked by tribal ceremonies, pleasant or painful, that marked the tribe's acceptance of the individual in his new status. These ceremonies were, long ago, given the name "rites of passage."

In our country, there have been at various times and in various classes similar rites: the boy's first long trousers; his first razor; college graduation; the debutante's "coming-out"; the celebration of marriage itself.

"Retirement" has become, in our accelerated machine culture, a "rite of passage," and, like those in other cultures, it is looked forward to with both happy anticipation and anxious dread: anticipation of the new freedom it promises; dread of the new worries it creates.

One famous recipe for retirement, for example, is that offered by a President of the United States: "You put a rocking chair on the porch, and sit in it. Then, after about six months, you--very slowly--begin to rock." Other models have been exemplified by other Presidents; and many enticing pictures of the life of retirement have been drawn by insurance and investment advertisers.But certain sobering facts remain. In the words of a recent author, "We think old people should be glad to lay down the burden of work. Turns out that retirement is our number one man killer in the mid-sixties. Medical miracles can prolong life threatened by illness; but no one has yet found the cure for retirement." The very values our society teaches us to cherish most highly-self-reliance, work and achievement, contribution to family and to society--are the ones retirement threatens. Our very identity may seem to be lost as we step off the merry-go-round of gainful employment, and face the threat of dependent idleness.Yet the wisdom, the experience, the judgment, the skill of our older persons constitute one of our greatest national reservoirs of human resource.

It will not, however, be tapped by any social miracle. Its value must be realized through (1) community and company planning, and (2) individual and group initiative.In the last decade or two, enormous amounts of study, discussion, and experiment have been devoted to the economic, social, and personal gains and losses of retirement. Labor and management alike have debated the compulsory age limit, the possibilities of job transfer, the questions of educational planning and economic cushioning. The U. S. Department of Health, Education, and Welfare has staffed a permanent committee on the matter of aging; and most large communities have committees studying its implications for them.But much--indeed most--of the job remains to be done by the individual: You. And the two most important things to recognize are these:

Gradually, just as "aging" has moved from the status of a "problem" to that of a promising achievement, so our thinking is moving from the painful prospect of "retirement from" to the more optimistic--and more important--question of "retirement to." The affirmative meaning of leisure, and the opportunities for creative personal fulfillment and service, alone or in company with others, are vital to one's planning for the later years.

The time to prepare for retirement is before the event. We begin "aging" the day we are born; and all of life is, in one sense, a training for its later years. Increasing recognition of this fact is leading to courses or units on aging and retirement in college, and even in high school, when the personal aspects of the problem pertain mostly to one's parents. Adult education, including radio and television, is putting increased attention upon the prior study of our later years.

Remarkable in our society also is the increasing gift of leisure it is making to all of us in our working years: leisure which we can, and should, use to develop, test, and practice the kinds of things we will do, and the kinds of persons we will be, after retirement comes.

Time Out for Reflection

Think of people you know who have made the adjustment to middle age successfully, and some who had difficulty making it. What factors seem to influence the ability to make it:

do men make it more easily than women?
does the presence or absence of children make a difference?
the age of the children?
the nature of the occupation?
the example of the older parents?
the presence or absence of money?

What can people do better at 50 or 60 than they could at 20?

Do people change the emphasis they put on different "roles" as they gain the middle years? e.g., as parent, homemaker, association member, entertainer, civic participant, etc.?

What changes do you notice in your own, or your friends', use of leisure time as you gain middle age?

Can people in middle age set new goals for themselves, or must they go on seeking (or lamenting) the ones they had in youth?

The transition periods of life may not be very clear-cut as we live along from day to day. Two careful observers of life processes, Dr. Maurice Linden and Dr. Douglas Courtney, have described five periods of the adult life span:

The Family Creative Period is, of course, the time when men and women are developing their family units.

The Social Creative Period is entered when the parents become aware of the family's position and responsibility in the community and when they try to integrate their offspring with social requirements.

The State Creative Period emerges at a still later date when the children are grown and set out on their own. At this period, the parents' vision is extended to the problems and requirements of the larger world in which their children will now live and participate.

The Moral and Ethical Reaffirmative Period follows when the older generation evaluates its world and tries to manipulate the state and its institutions for the well-being of oncoming generations

The Retrospective Examination Period comes finally when the person becomes concerned with system, order, and the meaning of human experience.

Do you agree that these five periods represent a logical sequence of life development in our present society? Would you combine any of these? Or add others?

Reflect on the experiences of older friends or relatives you have known intimately for a long time. Do you feel they are bearing out the LindenCourtney hypothesis?

The Freedom of Middle Age

Just before the prime of life, when a man or woman is working most efficiently and meeting the demands of life most successfully, it is true in a paradoxical way that he is least free. One's life is "cut out" for him at such a time, by the multitude of expectations which make up the roles of worker, parent, spouse, homemaker, citizen, church member, and association member. One's very success in these roles is a measure of the demands they make upon him. He has little freedom.

When the roles become less demanding, at the turning point of maturity, one has, for the first time since childhood, a real freedom to dispose of his time, to choose what he will do and will not do. One has a chance to redesign his life, to take up new roles and to alter old ones. The prize for the new design of life is happiness for another 25 or 30 years.

It is exhausting and even painful for a man or woman to try to hold on to the old roles and to live on in them when new and younger aspirants are pushing in to take them up. It is even more of a tragedy for a man or woman to give up the rewarding roles of the 40's and take nothing in their place, drawing into himself and getting less from, and giving less to, the world around him.

There is no need for people to live such a tragic life after the age of 50. There is no need for them to wear themselves out trying to live as if they were 40.

People can be happy and free and young in spirit in their middle age and for a long time afterward if they do some personal stocktaking and planning for this period of their lives.