America's Bank: The Epic Struggle to Create the Federal Reserve (46 page)

When the ABA held its annual convention:
For the ABA trashing of the bill as well as Wilson’s reaction, see press conference of October 9, 1913, as well as private correspondence to Ralph Pulitzer on October 9 and to Senator John Sharp Williams on October 11, all in
The Papers of Woodrow Wilson,
28:378–89; “2,000 Bankers Hit Money Bill Hard,”
The New York Times,
October 9, 1913; Willis,
The Federal Reserve System,
403; Link,
The New Freedom,
229; Link,
Wilson and the Progressive Era,
51; Glass,
An Adventure in Constructive Finance,
193; and Richard J. Ellis, ed.,
Speaking to the People; The Rhetorical Presidency in
Historical Perspective
(Amherst: University of Massachusetts Press, 1998), 170. See also
Proceedings
of the 39th Annual Convention of the Americans Bankers Association, available at http://babel.hathitrust.org/cgi/pt?id=njp.32101066788769;view=1up;seq=11.

Aldrich emerged from the obscurity:
Aldrich’s address was delivered on October 15 at the annual dinner of the Academy of Political Science: see Michael Clark Rockefeller, “Nelson W. Aldrich and Banking Reform: A Conservative Leader in the Progressive Era,” A.B. thesis, Harvard College, 1960, 89; Primm,
A Foregone Conclusion;
and “Aldrich Sees Bryan Back of Money Bill,”
The New York Times,
October 16, 1913. Interestingly, Andrew said the Aldrich speech was “too denunciating”—one of the few times he ever criticized his former boss: A. Piatt Andrew,
Diary of Abram Piatt Andrew, 1902–1914,
ed. E. Parker Hayden Jr. and Andrew L. Gray (Princeton, N.J., 1986), entry of October 15, 1913. For Wilson’s mail on the bill, see “Money Bill Delay Stirs Up President,”
The New York Times,
October 7, 1913. For the endorsements from the Merchants’ Association of New York and the U.S. Chamber of Commerce, see Link,
The New Freedom,
235.

more than 25,000 banks:
“Banking and Monetary Statistics, 1914–1941,” Federal Reserve Bank of St. Louis, 16; available at http://fraser.stlouisfed.org/docs/publications/bms/1914-1941/BMS14-41_complete.pdf.

Wilson next threatened:
For Wilson’s threats to take his fight either to the people or to a Democratic caucus, see these four articles in
The New York Times,
all from the fall of 1913: “Wilson May Stump for Currency Bill” (October 3), “Money Bill Delay Stirs Up President” (October 7), “To Urge Money Bill as a Party Measure” (October 8), and “Bankers Views in Senate” (October 10). See also Link,
Wilson and the Progressive Era,
51; Link,
The New Freedom,
230; Primm,
A Foregone Conclusion,
chapter 2; and, most especially, Ellis,
Speaking to the People,
170, which includes Wilson’s comment to the
Washington Post.

they anchored on the Potomac:
Broesamle,
William Gibbs McAdoo,
113.

unveiled a softer approach:
“Altered Money Bill May Satisfy Wilson,”
The New York Times,
October 17, 1913; Cooper,
Woodrow Wilson,
223; and Link,
The New Freedom
,
231.

Each of the three holdouts:
For background on the three renegade senators, see Cooper,
Woodrow Wilson,
223, 225, and 623; Primm,
A Foregone Conclusion;
and Link,
The New Freedom,
228. On Hitchcock, in particular, see Thomas W. Ryley,
Gilbert
Hitchcock of Nebraska: Wilson’s Floor Leader in the Fight for
the Versailles Treaty
(Lewiston, N.Y.: Edwin Mellen Press, 1998), especially 58–62. For “O’Gorman’s resistance,” see Kenneth E. Miller,
From Progressive
to New Dealer: Frederic C. Howe and American Liberalism
(University Park: Pennsylvania State University Press, 2010), 205–6. The
New York
Times
coverage of O’Gorman’s efforts to secure patronage in the spring of 1913 documents that Wilson ignored O’Gorman on his first significant local appointment, for U.S. Attorney in the Southern District of New York, and was set to ignore him again, for collector of customs—but then reversed course and appointed O’Gorman’s man: see “Marshall Named for Wise’s Place,”
The New York Times,
April 16, 1913; “Test for O’Gorman on Collectorship,” ibid., April 18, 1913; “Polk Out of Race; O’Gorman’s Victory,” ibid., April 30, 1913; and “Mitchel Nominated for Port Collector,” ibid., May 8, 1913. On Reed, see Daniel McCarthy, “Show Me a Statesman,”
The University Bookman
46, no. 3 (Fall 2008), a review of Lee Meriwether’s
Jim Reed,
Senatorial Immortal
) that is available at www.kirkcenter.org/index.php/bookman/article/show-me-a-statesman/.

“The stature of such a man”:
H. L. Mencken, “James A. Reed of Missouri,”
American Mercury,
April 1929; available at http://truthbasedlogic.com/ownman.htm.

After the three renegades:
The Papers of Woodrow Wilson
,
28:369–70; and “Altered Money Bill May Satisfy Wilson,”
The New York Times,
October 17, 1913.

more encouraging remarks:
Wilson to James O’Gorman, October 21, 1913, in
The Papers of Woodrow Wilson,
28:421; and Wilson to James Reed, October 23, 1913, in ibid., 425.

he might be willing to compromise:
“Wilson Won’t Fight Money Bill Changes,”
The New York Times,
October 21 1913. According to Link,
Wilson: The New Freedom,
231, the President seemed on the verge of coming to terms with O’Gorman and Reed.

The genesis of Vanderlip’s proposal:
See Vanderlip testimony in
Banking and Currency: Hearings,
3:1933–2037 and 2052–69, October 8, 1913. In a September 24, 1913, letter to James Stillman (Vanderlip Papers, Box b1-5), Vanderlip noted that he first met with O’Gorman and Reed in White Sulfur, West Virginia, in mid-September; the two senators expressed their opposition to the bill and encouraged him to appear before the committee. See also Vanderlip to James Stillman, October 10, 1913, ibid.

Privately, he expressed himself:
Vanderlip to Stillman, October 10, 1913.

“are the great debtors of the country”:
Banking and Currency: Hearings,
3:2056, October 8, 1913.

a unitary central bank:
Vanderlip to Stillman, October 10, 1913; and Vanderlip to James Stillman, October 27, 1913, Vanderlip Papers, Box 1-5.

“If the legislation is perfected”:
Vanderlip to Stillman, October 10, 1913.

“They came to my rooms”:
Vanderlip to Stillman, October 27, 1913.

Vanderlip’s optimism was misplaced:
Predictably, Glass did cite the Baltimore platform as incompatible with the Vanderlip plan: see “Wilson Upholds Glass Money Bill,”
The New York Times,
October 25, 1913.

He suggested that Vanderlip:
Vanderlip to Stillman, October 27, 1913.

He now proposed a central bank:
For accounts of Vanderlip’s second appearance before the committee and its reaction, see
Banking and Currency: Hearings,
3:2911–67, October 23, 1913; and “Currency Outlook Suddenly Changed,”
The New York Times,
October 24, 1913.

“quite along the lines”:
Frank Vanderlip to Wilson, October 23, 1913, in
The Papers of Woodrow Wilson,
28:428.

“I am at a loss”:
Wilson to Frank Vanderlip, October 24, 1913, in ibid., 430.

His message was succinct:
Link,
Wilson: The New Freedom,
233–34; and Cooper,
Woodrow Wilson,
224.

see if anything stuck:
“Strong Support for Central Bank,”
The New York Times,
October 29, 1913.

Wilson coordinated with Senate leaders:
Link,
Wilson and the Progressive Era
,
49. The
debate in the committee regarding the number of reserve banks was covered extensively in
The New York Times:
see, for instance, “Split on Regional Banks” (October 31, 1913) and “Cut Regional Banks to Four at Start” (November 1, 1913).

swung toward the Vanderlip notion:
“Would Curb Banks in Regional System,”
The New York Times,
November 2, 1913.

Wilson agreed to drop:
“Split on Regional Banks”; “Wilson Is Blamed for Currency Halt,”
The New York Times,
November 11, 1913.

he viewed dissension:
Ryley,
Gilbert Hitchcock of Nebraska,
59, 63.

Outside the halls of Congress:
Link,
Wilson: The New Freedom,
235; and Primm,
A Foregone Conclusion,
chapter 2.

he wrote reassuringly:
Festus J. Wade to Wilson, October 25, 1913, in
The Papers of Woodrow Wilson,
28:444.

“gay with fashion and beauty”:
Glass,
An Adventure in Constructive Finance,
168
–
74; and Primm,
A Foregone Conclusion,
chapter 2. Owen also participated in the debate, which was sponsored by the Economic Club of New York: see “Wall Street Defended to Owen and Glass,”
The New York Times,
November 11, 1913.

Wilson and Glass got a further boost:
“Fusion Mayoral Candidate Thrashes Tammany,”
The New York Times,
November 5, 1913; and “Wilson Is Cheered by Party Triumphs,” ibid., November 6, 1913. For O’Gorman’s and Reed’s shifts, see “Yield to Wilson on Regional Banks,” ibid., November 8, 1913. Link’s suggestion is in
Wilson and the Progressive Era,
51. Although Reed’s and O’Gorman’s resistance had seemed to weaken even before the election (see “Strong Support for Central Bank”), their support for Glass-Owen didn’t gel until November. See also Ryley,
Gilbert Hitchcock of Nebraska,
64. For a longer and satirical account of the effect of the election on the holdouts, especially O’Gorman, see “Revolt Against President Wilson Ends in a Fiasco,”
The New York Times
,
November 16, 1913.

The senator bridled:
Ryley,
Gilbert Hitchcock of Nebraska,
59; and “Wilson Is Blamed for Currency Halt.”

6 votes to 6:
Vanderlip to James Stillman, November 15, 1913, Vanderlip Papers, Box b1-5; and “Brighter Outlook for Currency Bill,”
The New York Times,
November 14, 1913.

Vanderlip went on a speaking tour:
Vanderlip to Stillman, November 1, 1913, Vanderlip Papers, Box 1-5; and Vanderlip to Stillman, November 15, 1913.

only $1 billion:
“160,980,084 Earned by National Banks,”
The New York Times,
December 9, 1913. More precisely, the figure was $1.068 billion.

“a set of men”:
Warburg to Robert Owen, November 10, 1913, Paul Moritz Warburg Papers, Folder 12.

He and Owen fortuitously:
Warburg,
The Federal Reserve System,
1:120–21; the train ride occurred on November 10, 1913.

a flood of correspondence:
The Warburg Papers are rife with correspondence (in English, German, and French) from October to December with bankers from Great Britain and numerous countries on the Continent. Many sources attest to Warburg’s lobbying: for instance, see Paul Warburg to House, November 14, 1913, and November 28, 1913, House Papers, Box 114a; Warburg to Robert Owen, October 30, 1913, Warburg Papers, Folder 7; Warburg to Owen, November 10 (including a schematic diagram by Warburg illustrating a preferred arrangement of reserve banks); most especially, Warburg to Robert Owen, November 24, 1913 (seeking final copies of the two bills referred by the committee to the Senate), Warburg Papers, Folder 106; Warburg to William McAdoo,
November 6, 1913, cited in Warburg,
The Federal Reserve System,
1:114; and Warburg to William McAdoo, November 20, 1913, cited in ibid., 124. Warburg and Jacob Schiff also paid a visit to Colonel House on November 17—see Charles Seymour,
The Intimate Papers of Colonel House, Arranged as a Narrative by Charles Seymour
(Boston: Houghton Mifflin, 1928), 165.

cut the number of Reserve Banks:
Willis,
The Federal Reserve System,
471; and “Senate to Tackle Three Money Bills,”
The New York Times,
November 21, 1913. The headline’s reference to “three” bills was misleading if technically accurate: the count included the Glass-Owen bill as passed by the House, which had no support in the Senate and was referred as a formality; only the version of Glass-Owen as modified in the Senate committee and the Hitchcock bill were referred with any hope of consideration.

changes in the discounting section:
Warburg,
The Federal Reserve System,
1:113–14.

a separate bill:
Vanderlip to J. P. Morgan Jr., November 18, 1913, Vanderlip Papers, Box 1-5. See also “Senate to Tackle Three Money Bills.”

Although unwilling to vote for Owen’s bill:
Ryley,
Gilbert Hitchcock of Nebraska,
64; see also “Brighter Outlook for Currency Bill,”
The New York Times,
November 14, 1913. On the legislative maneuver see Link,
The New Freedom,
233–34; Willis,
The Federal Reserve System,
468; and James L. Laughlin,
The Federal Reserve Act: Its Origin and Problems
(New York: Macmillan, 1933), 167–68.

Then, Wilson ordered:
Laughlin,
The Federal Reserve Act,
167–68; and “Party Conference to Push Money Bill,”
The New York Times,
November 26, 1913.