THE MONSTER'S EXPENSES
YOU are going now to look over--and not overlook--the most stupendous,
wasteful and exorbitant bank expense account ever entered on bank
ledgers on this earth. You are going to look at the details of an
expense account where the items run by millions, where expenses have
no legal limit and where they are incurred, paid and audited without
any supervisory authority. You are going to gaze at an expense account
where the "sky is the limit."
Take first a look at the New York Federal Reserve Bank's expense
account. That one is the most arrogant, wasteful and prodigal of all
the twelve regional satrapies.
In 1917 the entire salary and wages account of the New York Federal
Reserve Bank was $970,580 and their total loans and discounts were
$399,078,000. Mark that down--salaries and wages of $970,580 and
loans and discounts (which really measure the business of a bank) of
$399,078,000, or $1 of expense to every $413 of loans and discounts.
On January 25, 1922, the salary and wages account of the New York
Federal Reserve Bank was $4,988,703, with loans and discounts of
$146,526,938, or $1 of expense to every $29 of loans and discounts!
Ask any practical banker, any administrative business man, any expert
accountant or any efficient expert if it is possible to justify any
such expense ratio. One to four hundred and thirteen in 1917 and one to
twenty-nine in 1921--fourteen to one raise!
In 1917 there were 12 officers of that bank to administer loans of
$399,078,000. In 1921 there were 40 officers of that bank to administer
loans of $146,526,938. In other words, you get 28 more officers to
administer a business shrunken down over sixty per cent! In other
words, you get over a two hundred per cent increase in officers to
administer a sixty per cent business shrinkage!
And now incidentally the pay of those 40 officers--administering a
sixty per cent shrunken business--amounted to more money than the
salaries of the President of the United States, the Vice President of
the United States, half the United States Senate and the Governors of
twelve American States besides! If that isn't bottomless bureaucratic
greed expressed mathematically, you express it yourself!
Look further into the depths of this golden pool of New York Federal
Reserve expense plunderbund. You are helping pay it and you are
entitled to scrutinize the salary items. Take 'em as they come.
J. Crane entered the bank at a yearly salary of $1,080 as manager
foreign department and now receives a yearly salary of $7,500, or an
increase of 594 per cent.
A.J. Lins, manager at large, entered the bank at a yearly salary of
$1,500 and now receives a yearly salary of $10,000 or an increase of
566 per cent.
John Raasch, manager supply department, entered the bank at a yearly
salary of $1,000 and now receives a yearly salary of $6,000, or an
increase of 500 per cent.
E.R. Kenzel, deputy governor, entered the bank at a yearly salary of
$4,200 and now receives a yearly salary of $22,000, or an increase of
423 per cent.
A.W. Gilbart, controller of administrations, entered the bank at a
yearly salary of $2,400 and now receives a yearly salary of $12,500, or
an increase of 420 per cent.
L.R. Rounds, controller of accounts, entered the bank at a yearly
salary of $2,400 and now receives a salary of $12,500, an increase of
420 per cent.
Chas. H. Coe, manager of the check department, entered the bank at a
yearly salary of $1,500 and now receives a yearly salary of $7,200, an
increase of 380 per cent.
W.B. Matteson entered the bank at a yearly salary of $2,400 and now
receives $10,000, an increase of 316 per cent.
J.D. Higgins, controller of cash, entered the bank at a yearly salary
of $3,000 and now receives a yearly salary of $12,000, an increase of
300 per cent.
S.S. Vansant, manager discount department, entered the bank at a
yearly salary of $1,500 and now receives a yearly salary of $5,000, an
increase of 233 per cent.
R.M. Gidney, controller at large, entered the bank at a yearly salary
of $4,000 and now receives a yearly salary of $15,000, or an increase
of 275 per cent.
I.W. Waters, manager personal service department, entered the bank at a
yearly salary of $2,250 and now receives a yearly salary of $7,200, or
an increase of 220 per cent.
James Rice, manager government bond department, entered the bank at a
yearly salary of $1,800 and now receives a yearly salary of $5,500, or
an increase of 205 per cent.
L.H. Hendricks entered the bank on a yearly salary of $6,000 and now
receives a yearly salary of $18,000, or an increase of 200 per cent.
Incidentally Benjamin Strong, the governor of the New York Federal
Reserve Bank, has had his salary increased from $30,000 per year to
$50,000 per year--more than six times the pay of a United States
Senator!
Ask any corporate manager, any practical banker, or any efficiency
expert if they permit, or if they know of any such stupendous salary
increases--increased and maintained in a time of general disaster and
enforced economies. If this isn't strutting bureaucracy running amuck
with public money, what is it?
Take now a look at the total expense account--which you are helping to
pay--of the Federal Reserve System for the year 1921. It amounted to
the stupendous sum of $36,066,065, or an average of $3,005,500 for each
one of the twelve regional satrapies! You can't measure it--because
there is nowhere on earth any other banking expense account by which to
measure it! Like an Andean peak it towers aloft in solitary splendor.
But you can look at some of the items. Here they are. The New York
Federal Reserve Bank heads the list of extravagance with an expense
account of $8,167,780, and the Minneapolis Federal Reserve Bank was the
most modest--and not any too modest at that--with an expense account
of $1,325,867. It cost you for bank officers' salaries $2,383,994, for
clerk hire $15,201,393, for special officers and watchmen $789,879 and
for "all other" $1,102,984. What that "all other" item of $1,102,984
really is, is deep buried in Federal Reserve archives. When you get
through with bank officers, bank clerks, special officers and watchmen,
you would think that included about all possible bank employees, but
Federal Reserve ingenuity slips over $1,102,984 under the cloak of "all
other!"
It cost you $7,750 for Federal Reserve Governors to "confer," $4,443
for Federal Reserve Agents to "confer" and $10,522 for the Federal
Advisory Council--whatever that is--to "confer." "Conferences"--in
bureaucracy--come high, don't they? And it cost you $168,556 to hold
directors' meetings with 173 out of 254 of them living in the same town
where the bank or its branch is located. Traveling expenses cost you
$357,962--some travelers these Federal Reserve tourists are!
These bureaucratic "expenses" of a parasitical system hooked on to
your banking system are stupendous, titanic, gigantic! They are
indefensible--and undefended too--from any possible standpoint of
efficiency, economy or necessity. Look them over in cold blood.
Look over the stupendous salary raises--both in amounts and in
percentages--in the New York Federal Reserve satrapy and compare
them with any private business on earth. Private stockholders--not
commandeered by law and not chained by act of Congress--would drive
out any such maladministration of extravagance. You know it.
Who is responsible--directly, morally and legally responsible--for
this orgy of Federal Reserve extravagance absolutely unequaled in
the history of the world or in the history of banking? Why, the
Federal Reserve Board at Washington is responsible. What makes them
responsible? Here is the exact language. Read it. "Any compensation
that may be provided by Boards of Directors of Federal Reserve
Banks for directors, officers or employees shall be subject to the
approval of the Federal Reserve Board." That's plain, isn't it? If
the Federal Reserve Board at Washington doesn't "approve" these huge
compensations, they can not be paid. It is the Federal Reserve Board at
Washington--and no other authority on earth--which is responsible for
the greatest orgy of expense ever strapped on the backs of staggering
business. It's their ukase, it's their decree, it's their order which
registers these titanic expenses--every penny of which is wrung from
American producers of wealth! And they are political appointees--not
elected, but appointed. The Federal Reserve Board at Washington really
wields a power greater than any sceptered monarch ever swayed. At their
nod or at their beck every Federal Reserve employee holds his job, for
if they don't "approve" his "compensation" he can't attach his lips
to the public teat with its golden flow of "compensation!" It's the
Federal Reserve Board at Washington--unsupervised and with legally
limitless power--which is responsible for this Federal Reserve expense
orgy.