America's Bank: The Epic Struggle to Create the Federal Reserve (41 page)

“You don’t understand politics”:
Frank A. Vanderlip with Boyden Sparkes,
From Farm Boy to Financier
(New York: D. Appleton-Century, 1935), 225–26.

Morgenthau reported to New York bankers:
Vanderlip to Stillman, September 20, 1912; and Willis,
The Federal Reserve System,
139–40.

Wilson continued his courtship:
Cooper,
Woodrow Wilson,
168; and Coletta,
William Jennings Bryan,
2:81.

Laughlin was the only petitioner with:
Laughlin,
The Federal Reserve Act,
177–79.

“the better part of an entire day”:
Samuel Untermyer to Wilson, November 6, 1912, in
The Papers of Woodrow Wilson,
25:528–29; Wilson’s response, dated November 12, is in ibid., 542.

“formulated, tentatively, a substitute”:
Carter Glass to Wilson, November 7, 1912, in
The Papers of Woodrow Wilson,
25:530–31; Wilson’s response, dated November 14, is in ibid., 547.

“short vacation”:
Wilson to Ira Remsen, November 14, 1912, ibid.

a conference between Willis and Untermyer:
H. Parker Willis to Glass, November 7, 1912, Carter Glass Collection, Box 25/26. The conference had occurred the day before, November 6, which itself was the day after the election.

“Mr. Untermyer contemplates”:
Ibid.

“the main ideas of the Aldrich bill”:
Ibid.

“impertinent activity”:
Glass to Arsène Pujo, November 8, 1912; Glass to Arsène Pujo, November 12, 1912; and Arsène Pujo to Glass, November 11, 1912, telegram, all in ibid., Box 64. See also “Laughlin’s untitled and undated retrospective memorandum” (typed), James Laurence Laughlin Papers, Glass bill folder.

“Moral: Put not your trust”:
James Laughlin to Willis, November 21, 1912, H. Parker Willis Papers, Box 7.

“been working on various phases”:
Willis to Glass, November 7, 1912.

In mid-November, Glass hosted Laughlin:
Laughlin to Willis, November 21, 1912; “Laughlin’s untitled and undated retrospective memorandum”; and Laughlin,
The Federal Reserve Act,
115, 117–19, and 120–21.

Glass, in fact, was still laboring to understand:
Colonel House recorded that Glass admitted his lack of expertise: see Edward House to Wilson, November 28, 1912, in
The Papers of
Woodrow Wilson,
25:564. Glass’s lack of expertise was also on display in a December 14, 1912, letter to Willis: “As I said to you last night, quite a number of questions present themselves to my mind” (Willis Papers, Box 1). Furthermore, Laughlin later wrote that Glass was “slow in taking in the banking principles,” although once he grasped them he was “firm in his position and was a good fighter for what he believed” (“Laughlin’s untitled and undated retrospective memorandum”). See also Robert Craig West,
Banking Reform and the Federal
Reserve, 1863
–
1923
(Ithaca, N.Y.: Cornell University Press, 1974), 94.

“too prone to be suspicious”:
Glass to H. Parker Willis, December 9, 1912, Glass Collection, Box 25/26.

“allowed little or nothing to become public”:
Warburg,
The Federal Reserve System,
1:81.

“sound banking” principles:
Ibid., 81–82. For the Morawetz article, see West,
Banking Reform and the Federal Reserve,
95.

“I fear, Mr. Glass”:
Carter Glass,
An Adventure in Constructive Finance
(Garden City, N.Y.: Doubleday, 1927), 32–37
.

“I think the quicker you see him”:
Edward House to Wilson, November 28, 1912, in
The Papers of Woodrow Wilson,
25:563–64
.

In December, Untermyer turned:
“Five Men Control $368,000,000 Here,”
The New York Times,
December 11, 1912.

Morgan regarded public testimony:
See, for example, Jean Strouse,
Morgan, American
Financier
(New York: Random House, 1999), 5.

“by special train with half a dozen”:
Vanderlip to James Stillman, December 20, 1912,Vanderlip Papers, Box 1-4.

“No, sir; the first thing is character”:
House Committee on Banking and Currency,
Report of the Committee Appointed Pursuant to House Resolutions 429 and 504 to Investigate the Concentration of Control of Money and Credit,
62d Cong., 3d sess., submitted February 28, 1913 (Washington, D.C.: Government Printing Office, 1913), 136; available
at https://fraser.stlouisfed.org/docs/historical/house/money_trust/montru_report.pdf. (Hereinafter cited as Pujo Report.)

as later witnesses would demonstrate:
See, for example, the testimony of George F. Baker, ibid., 1503.

“You are an advocate of combination and cooperation”:
Ibid., 1050.

Untermyer deliberately zeroed in on railroads:
Ibid., 1019, 1034, and 1035.

had at times been “blundering”:
Vanderlip to Stillman, December 20, 1912.

Laughlin proposed that monetary policy:
Laughlin Papers, Plan D folder.

Warburg also dashed off a fourteen-page:
Warburg to Henry Morgenthau, December 7, 1912, Paul Moritz Warburg Papers, Box 1, folder 3. Warburg’s plan was, characteristically, elaborated in great detail. He proposed to Morgenthau that Congress enact
two
pieces of legislation, one for a bank with branches, another providing for a national clearinghouse. Warburg’s letter to Colonel House of December 19, 1912 (Edward M. House Papers, Box 114a) documents that the plan was conveyed to House, which surely means that Wilson was advised of it.

Glass also met with Piatt Andrew:
A. Piatt Andrew,
Diary of Abram Piatt Andrew, 1902
–
1914,
ed. E. Parker Hayden Jr. and Andrew L. Gray (Princeton, N.J., 1986), entry for December 14, 1912. Apparently at their breakfast meeting, Glass advised Andrew of his continuing worries about securing the Banking Committee chairmanship. Three days later, Aldrich wrote Andrew (A. Piatt Andrew Papers, Box 3, folder 17), offering to help Glass gain the chairmanship, presumably by putting in a word with his friends in Congress. This suggests that Aldrich, by then of course retired, was held in higher esteem by congressional Democrats than their public utterances suggested. Lastly, in another example of pressure for a central bank, the economist Charles Conant urged Glass to endorse a “concentration” of reserves (Glass to Willis, December 9, 1912).

“deluged with letters”:
Glass to H. Parker Willis, December 14, 1912, Glass Collection, Box 25/26.

Glass’s every instinct was to try:
James Laughlin to Willis, December 21, 1912, Willis Papers, Box 7. On Glass’s irritation over the attention Untermyer received from newspapers, see, for example, Glass to H. Parker Willis, December 3, 1912, Glass Collection, Box 25/26. For Glass’s efforts to screen witnesses, see West,
Banking Reform and the Federal Reserve,
97–100.

“Mr. Hulbert is a very sharp critic”:
Willis to Carter Glass, December 14, 1912, Willis Papers, Box 1.

Glass put off seeing him:
Laughlin’s query regarding authorship is missing; Willis’s reply of December 18, 1912 (Laughlin Papers, Glass bill file) says: “As to authorship of the forthcoming measure, custom dictates that the Chairman’s name shall be given to any bill that may be reported.” Laughlin had proposed to Willis on December 2 that they and Glass meet promptly in Baltimore to discuss Laughlin’s progress. On December 6, when Laughlin received word from Willis that Glass wanted to put off a meeting until January, Laughlin realized his role would be strictly consultative. He immediately wired Glass, “Telegram received much disappointed at postponement.” More expressions of hurt followed. Notwithstanding his bruised feelings, Laughlin continued to revise his plan for Willis and Glass’s benefit, and succeeded in meeting Glass at his hotel on December 21. (See Laughlin correspondence of December 6, 7, and 21, 1912, in Willis Papers, Box 7.)

“I was considerably taken”:
Laughlin to H. Parker Willis, December 7, 1912, Laughlin Papers, Glass bill file.

The only audience Glass wanted was with Wilson:
Carter Glass to Wilson, December 14, 1912, in
The Papers of Woodrow Wilson,
25:588–89; Carter Glass to Wilson, December 18, 1912, in ibid., 608; and “The President-Elect Back from Bermuda,”
The New York Times,
December 17, 1912.

CHAPTER
ELEVEN
: THE PRINCETON DEPOT

“The ghost of Andrew Jackson stalked”:
Carter Glass,
An Adventure in Constructive Finance
(Garden City, N.Y.: Doubleday, 1927), 110–11.

“I do not care what you call it”:
Banking and Currency Reform: Hearings Before the Subcommittee of the Committuee on Banking and Currency, Charged with Investigating Plan of Banking and Currency Reform and Reporting Constructive Legislation Thereof,
62d Cong., 3rd sess., House of Representatives, January 14, 1913, 233; available at http://books.google.com/books?id=pc0qAAAAYAAJ&printsec=frontcover&source=gbs_ge_summary_r&cad=0#v=onepage&q&f=false.

Glass was anxious to meet:
Carter Glass to Willis, December 23, 1912, Henry Parker Willis Papers, Box 1; and Glass to H. Parker Willis, December 19, 1912, Carter Glass Collection, Box 25/26.

intensely agitated by the pressure:
See, for example, Willis to Carter Glass, December 21, 1912, Willis Papers, Box 20, in which Willis warned Glass to expect a “sharp fight” from bankers lobbying for a central bank. Such missives inevitably distressed Glass.

“Confined by attack of cold”:
James E. Palmer Jr.,
Carter Glass: Unreconstructed Rebel
(Roanoke: Institute of American Biography, 1938), 76. Glass’s telegram about his arrival is in Willis Papers, Box 1.

“the only place in the world”:
William Diamond,
The Economic Thought of Woodrow Wilson
(Baltimore: Johns Hopkins University Press, 1943), 16.

Glass’s family:
Harry Edward Poindexter, “From Copy Desk to Congress: The Pre-Congressional Career of Carter Glass,” Ph.D. diss., University of Virginia, 1966, 4.

free of any southern accent:
John Milton Cooper Jr.,
Woodrow Wilson
(New York: Knopf, 2009), 23; for Wilson’s feelings about the Civil War, see ibid., 34.

“He did not doubt”:
Diamond,
Economic Thought of Woodrow Wilson,
15.

Princeton was bitterly cold:
Glass,
An Adventure in Constructive Finance,
81–82; and Rixey Smith and Norman Beasley,
Carter Glass
(New York: Longmans, Green and Co., 1939), 90–92.

Glass was painfully aware:
Glass to H. Parker Willis, December 29, 1912, Glass Collection, Box 25/26.

nothing so formal as a draft:
Smith and Beasley,
Carter Glass,
90.

What Glass and Willis proposed:
The most comprehensive source for what was presented at Princeton is Henry Parker Willis,
The Federal Reserve System: Legislation, Organization and Operation
(New York: Ronald Press, 1923), 141–47. See also James L. Laughlin,
The Federal Reserve Act: Its Origin and Problems
(New York: Macmillan, 1933), 127–28; and Glass,
An Adventure in Constructive Finance,
81–85. Warburg gives his interpretation in Paul M. Warburg,
The Federal Reserve System: Its Origin and Growth—Reflections and Recollections
(New York: Macmillan, 1930), 1:82.

the banking system should be organized:
For Willis and Glass’s intent, see Willis to Glass, December 19, 1912, which states, “The effect of these changes will be to strengthen the reserve banks very greatly as against the large national banks of New York and other central reserve cities.” For “local field,” see Willis,
The Federal Reserve System,
145.

“in regard to centralization”:
Willis,
The Federal Reserve System,
141.

The president-elect suggested:
Whether Wilson definitively affirmed that a central bank would be superior is unknowable, but it seems likely. All we have is the account of Willis, who averred that the president-elect “recognized the fact that such an organization was politically impossible even if economically desirable” (ibid., 146).

“You are far on the right track”:
Wilson to Carter Glass, December 31, 1912, in Arthur S. Link,
The Papers of Woodrow Wilson
(Princeton, N.J.: Princeton University Press, 1966–1989), 25:650; Glass,
An Adventure in Constructive Finance,
81–82; and Willis,
The Federal Reserve System,
146, 147.

“perhaps, an hour with Mr. Wilson”:
Glass to Willis, December 29, 1912.

“We may ourselves have in readiness”:
Carter Glass to Wilson, December 29, 1912, in
The Papers of Woodrow Wilson,
25:641–42.

“It is clear to me”:
Glass to Willis, December 29, 1912.

“I am not entirely convinced”:
Carter Glass to Willis, January 3, 1913, Willis Papers, Box 1.

Forgan, the leader:
James Laughlin to Willis, January 10, 1913, ibid., Box 7.