America's Bank: The Epic Struggle to Create the Federal Reserve (31 page)

Desperate to enact a reform while the Republicans still held power, Aldrich absconded to remote Jekyll Island in Georgia with Piatt Andrew and three leading Wall Street bankers. Working in absolute secrecy in this still-standing clubhouse, the conspirators drafted the Aldrich Plan.

During the week at Jekyll Island, tension simmered between Aldrich and Warburg. The light touch of Henry P. (Harry) Davison cooled them down.

By the time William Howard Taft succeeded his good friend Theodore Roosevelt as president, the growing strain in their relationship was visible in their mutually stiff poses. Roosevelt’s ultimate break with Taft cleaved the Republican Party in two and dealt a fatal blow to the Aldrich Plan.

The political operator Edward M. House, known by the honorific “Colonel,” dedicated himself to making Wilson president. His first task was winning the endorsement of William Jennings Bryan.

Inauguration day, March 4, 1913. Wilson pledged to reform the banking system, but he reassured bankers that he would “restore” rather than “destroy.”

Treasury Secretary William G. McAdoo—businessman, progressive, and southerner—epitomized the new administration. He boldly proposed his own banking plan, putting Glass’s Federal Reserve bill in jeopardy.

Robert L. Owen, chairman of the Senate Banking and Currency Committee, and a disciple of Bryan, demanded that control over the Fed rest in the federal government. Glass wanted private bankers to retain some control.

With farmers, bankers, progressives, and westerners each insisting on distinct amendments, it was left to Wilson to break the logjam in Congress. He wrote to a friend, “The struggle goes on without intermission.”

Signing of the Federal Reserve Act, December 23, 1913,
painting by Wilbur G. Kurtz. From left to right: Lindley Garrison, secretary of war; Josephus Daniels, secretary of the Navy; Franklin K. Lane, secretary of the interior; Albert S. Burleson, postmaster general; Senator Owen; Champ Clark, Speaker of the House; Secretary McAdoo; President Wilson (seated); Representative Glass; Representative Oscar Underwood; William B. Wilson, secretary of labor.

Many people helped me with this book. I am grateful to Sarah Binder, Michael D. Bordo, J. Lawrence Broz, Gary Gorton, Richard S. Grossman, Douglas A. Irwin, William L. Silber, and Ellis Tallman—super scholars and historians who provided me with encouragement and help, in some cases often, in all cases graciously. I am grateful, as well, to John Hunter for a stimulating tour of the Jekyll Island Museum and historic site, and to Michelle A. Smith, nonpareil assistant to the Federal Reserve Board, and to the Fed’s Sara Messina, for tracking down some details on the operation of the present-day central bank. To my friend José Souto, your legwork on Wall Street is not forgotten. Alex Beam, Neil Barsky, Ron Chernow, and David Moss—that would be three writer-historians and one journalist-filmmaker: four good friends—provided advice, answered queries, and encouraged me as only colleagues can. Who could ask for more? Jeffry Frieden, Geoffrey Lewis, Matthew Lowenstein, Mitch Rubin, Jeffrey Tannenbaum, and Mark Williams (five friends and a certain relative) read every word of this book in progress. With each of you, editing calls were a labor of love, even as they were instructional and frank. To a writer in the midst, that is as good as it gets. My sister Jane Ruth Mairs lent her sharp editor’s eye when I needed it. My in-laws, Janet and Gil Slovin, and my mother, Helen
Lowenstein, read and absorbed more about bankers, populists, and turn-of-the-century politicians than I had a right to expect. None of you feigned neutrality; your partisanship on my behalf was richly appreciated.

Apart from the narrative in the book, there is a narrative
of
the book, which every author lives from the moment of inception until the distant moment of publication. The early going, in the summer of 2012, was difficult indeed. I have countless family and friends to thank for sustaining me in that time, not least my cousins Michael and Carol Lowenstein and Wendy and Neil Sandler. When research and other aspects of everyday life had all but come to a standstill, Dr. Virany Hillard, my daughter’s surgeon at Westchester Medical Center, together with her colleagues and staff, turned an enveloping nightmare into a story of redemption, now steadily receding in the rearview mirror. I must also mention Lisa Berkower (and Mitch, too)—in whose warm abode, and at whose polished-walnut dining room table, I labored on this book. Next time, I promise to use coasters.

When bad things happen you discover who your friends are. Melanie Jackson, my agent, and Ann Godoff, my editor, demonstrated by word and deed that their personal feeling trumped editorial and business concerns. Hard to forget that. I am as grateful as ever to Melanie for her professionalism and loyalty. Ann’s insights and discerning judgment made a telling difference on every page; I am also deeply grateful to her for believing, from the beginning, that a hundred-year-old banking story could be brought to exciting life. I am also indebted to the entire crew at Penguin Press; with them, publishing remains an art form and a collaboration. Last and assuredly not least, Judy, my wife, read and critiqued this book numerous times. She read it on buses, planes, and trains; she read it upstairs and downstairs; she read it in fair weather and, during our present epic winter, foul. Her dedication was remarkable; her literary skills are
equally formidable. Judy told me at the outset she was a reader. She did not divulge that she is also a superior editor and critic. For her generosity, her talent, and her love, I am profoundly grateful.

R
OGER
L
OWENSTEIN

Boston, March 2015