REFORMING THE CURRENCY
I have bitterly resented at times the imputation and charge that Woodrow
Wilson is so egotistical, self-willed, and so wedded to his own ideas that
he not only does not invite suggestion from the outside but that he
resents it and refuses to be guided by it.
I feel that my daily intimacy with him for eleven years gives me the right
to speak frankly in the matter. Of course, like every great man, he is
firmly set in his opinions. He holds and cleaves to them with a passionate
devotion and tenacity but only after the fullest consideration of all the
facts and information upon which he bases a final conviction. Time and
again I have seen him gallantly retreat under the fire of a better
argument in a matter that he had been previously disposed to favour.
And what of his attitude toward those who came to the Executive offices to
argue with him on some vital matter in which he had formed what appeared
to be an unalterable judgment? Never did he assume the unfriendly or
unyielding attitude of the doctrinaire or the man of a single idea. I
recall a case in point. He was discussing the revenue situation with
Representative Claude Kitchin of North Carolina, at a time when it was the
subject of bitter controversy in the ranks of the Democratic party. The
President and Mr. Kitchin held radically divergent views on this matter;
the President sought to lead the party in one direction and Mr. Kitchin
openly pursued an opposite course. I was present at this conference. No
warm friendship existed between these two men; but there was never any
evidence of hostility in the President's attitude toward Mr. Kitchin. He
listened politely and with patience to every argument that Mr. Kitchin
vigorously put forward to sustain his contention in the matter, and took
without wincing the sledgehammer blows often dealt by Mr. Kitchin. The
President replied to Mr. Kitchin's arguments in an open, frank manner and
invited him to the fullest possible discussion of the matter.
I recall the conclusion of this interview, when it seemed that, having
driven the President from point to point, Mr. Kitchin was the victor.
There was no disappointment or chagrin evident in the President's manner
as he faced Mr. Kitchin to accept his defeat. He met it in true
sportsmanlike fashion. At the conclusion of Mr. Kitchin's argument the
President literally threw up his hands and said, quietly, without showing
a trace of disappointment: "I surrender, Mr. Kitchin. You have beaten me.
I shall inform my friends on the Hill that I was mistaken and shall
instruct them, of course, to follow you in this matter."
I could crowd this chapter with similar incidents, but it would be a work
of supererogation.
Never before was Mr. Wilson's open-minded desire to apply in practice the
principle of common counsel better illustrated than in his handling of the
important work in connection with the establishment of the Federal Reserve
Act, the keystone of the great arch of the Democratic Administration. It
was the first item in his programme to set business free in America and to
establish it upon a firm and permanent basis. He aptly said to me, when he
first discussed the basic reason for the legislation, he wished not only
to set business free in America, but he desired also to take away from
certain financial interests in the country the power they had unjustly
exercised of "hazing" the Democratic party at every Presidential election.
Shortly after the Presidential election in 1912, while he was burdened
with the responsibilities of the Executive office at Trenton, New Jersey,
he began, in collaboration with that fine, able, resourceful Virginian,
Representative Carter Glass, then chairman of the Banking and Currency
Committee of the House, the preparation of the Federal Reserve Banking and
Currency Act. For hours at the Executive office in Trenton the Virginia
Congressman conferred with the Governor of New Jersey over the preliminary
drafts of this most vital piece of legislation. For days the work of
preparation was carried on, so that when Mr. Wilson arrived in Washington
to take up the duties of the Presidency, the Banking and Currency Bill was
in shape and ready for immediate introduction in the Senate and House.
Looking back over the struggle that ensued from the time this measure was
introduced into the Senate and House, I often wonder if the people "back
home," especially the various business interests of the country, who have
been saved from financial disaster by this admirable and wholesome piece
of legislation, ever realized the painstaking labour and industry, night
and day, which Woodrow Wilson, in addition to his other multitudinous
duties, put upon this task. Could they but understand the character of the
opposition he faced even in his own party ranks, and how in the midst of
one of Washington's most trying summers, without vacation or recreation of
any kind, he grappled with this problem in the face of stubborn
opposition, they would, perhaps, be willing to pay tribute to the
earnestness and sincerity of this man who finally placed upon the statute
books one of the greatest constructive pieces of legislation of half a
century. Having given his heart to this important task, whose enactment
into law was a boon to business and established for the first time in
America a "Democracy of Credit," as he was pleased to call it, he
relentlessly pursued his object until senators and representatives yielded
to his insistent request for the enactment of this law, not under the
stress of the party whip, but through arguments which he passionately
presented to those who sought his counsel in this matter.
During this time I gladly accepted the President's invitation to spend the
summer with him at the White House, where I occupied the bedroom that had
been used as Mr. Lincoln's Cabinet Room, and where Mr. Lincoln had signed
his famous Emancipation Proclamation. My presence, during that summer, as
a member of the President's family, gave me a good opportunity to see him
in action in his conferences in regard to the Federal Reserve Act. Never
was greater patience, forbearance, or fortitude, shown by a chief
executive under such trying circumstances. Day after day, when it seemed
as if real progress was being made, unexpected opposition would develop
and make it necessary to rebuild our shattered lines, until finally the
bill was out of the House and on its way to the Senate.
Its arrival in the Senate was but the beginning of what appeared an almost
interminable struggle. The President's stalwart adviser in the Treasury,
Mr. McAdoo, was always at hand to rally and give encouragement to our
forces, many of whom at times were in despair over the prospects of the
bill. The leaders of the opposition on the committee were Senator Root on
the Republican side and Senators O'Gorman and Reed on the Democratic.
It seemed at times as if they had succeeded in blocking an agreement on
the Conference Report. At last word was brought to the President by
Representative Glass that the opposition of these gentlemen might succeed
in killing the bill. The President up to this time, although fighting
against great odds, showed no impatience or petulancy, but the message
brought by Mr. Glass was the last straw. Looking at Mr. Glass, with a show
of fire and in a voice that indicated the impatience he felt, the
President said: "Glass, have you got the votes in the committee to
override these gentlemen [meaning O'Gorman and Reed]?" Glass replied that
he had. "Then," said the President, "outvote them, damn them, outvote
them!"
Mr. McAdoo came to the White House a few days later to make a report about
the situation in the Senate, with reference to the Federal Reserve Act.
His report was most discouraging as to the final passage of the bill. He
said that his information from the Hill was that the leaders of the
opposition in the Senate were bent upon a filibuster and that the
probabilities were that the Senate would finally adjourn without any
action being taken on the Federal Reserve Act.
This conversation took place on the White House portico, which overlooks
the beautiful Potomac and the hills of Virginia. It was one of the hottest
days in June, a day which left all of us who were about the President low
in spirit. Only those who know the depressing character of Washington's
midsummer heat can understand the full significance of this statement. The
President on this occasion was seated in an old-fashioned rocker, attired
in a comfortable, cool-looking Palm Beach suit. Mr. McAdoo reported the
situation in detail and said that, in his opinion, it was hopeless to try
to do more with the bill: that an impasse had been reached between the
Senate and the House. The President quickly interrupted Mr. McAdoo,
saying, with a smile: "Mac, when the boys at Princeton came to me and told
me they were going to lose a football game, they always lost. We must not
lose this game; too much is involved. Please say to the gentlemen on the
Hill who urge a postponement of this matter that Washington weather,
especially in these days, fully agrees with me and that unless final
action is taken on this measure at this session I will immediately call
Congress in extraordinary session to act upon this matter." This
challenge, brought to the Hill by Mr. McAdoo, quickly did the job and the
bill was soon on its way to the White House.
Mr. Wilson conducted the conferences in this matter with friends and foes
alike with a quiet mastery and good temper diametrically contrary to the
reports sedulously circulated for political purposes, that he was
autocratic and refused to cooperate with the members of the Senate and
House in an effort to pass legislation in which the whole country was
interested.
We have only to recall the previous attempts made by former
administrations to legislate upon the currency question, especially the
efforts of the Harrison and Cleveland administrations, to understand and
appreciate the difficulties that lay in the path of Woodrow Wilson in his
efforts to free the credit of the country from selfish control and to push
this vital legislation to enactment. Previous attempts had always resulted
in failure and sometimes in disaster to the administrations in control at
the time. The only evidences of these frequent but abortive efforts to
pass currency legislation were large and bulky volumes containing the
hearings of the expensive Monetary Commission that had been set up by
Senator Aldrich of Rhode Island. As an historian and man of affairs,
Woodrow Wilson realized the difficulties and obstacles that lay in his
path in attempting to reform the currency, but he was not in the least
daunted by the magnitude of the task which confronted him. He moved
cautiously forward and pressed for early action at the first session of
the Congress following his inauguration. He realized that with the passage
of the tariff legislation, which always acts as a business depressant, it
was necessary at the same time to have the stimulus the Currency Bill
would afford when enacted into law. The split of '96 in the Democratic
ranks over the money question was an additional reason for cautious and
well-considered action if the Federal Reserve Bill was to become a
reality.
The presence of Mr. Bryan in the Cabinet and his well-known views on this
question were strong reasons for watchful and careful prevision. It was
obvious to Mr. Wilson from the outset that insurmountable difficulties lay
in his path, but he brushed them aside as if they were inconsequential.
In the Committee on Banking and Currency, in both the Senate and House,
were many ardent and devoted friends of Mr. Bryan, who thought that his
radical views on the money question could be used as a rallying point for
opposition to the President's plan for currency reform. But those who
counted on Mr. Bryan's antagonism were doomed to disappointment and
failure, for while it is true that Mr. Bryan found serious objections to
certain parts of the bill, when these were eliminated he moved forward
with the President in the most generous fashion and remained with him
until the Federal Reserve Act was made part of the law of the land.
It was in a conference with members of the Banking and Currency Committee
that I first saw the President in action with the gentlemen of the Senate
and House. He had invited the Democratic members of the Banking and
Currency Committee to confer with him in the Cabinet Room in the White
House offices. From my desk in an anteroom I heard all the discussions of
the bill. There was full, open discussion of the bill in all its phases at
this conference in which were collected the conservatives of the East, the
radicalists of the West, and those who came to be known as the "corn
tassel" representatives of the South, all holding widely divergent views
and representing every shade of opinion, some of it sharply antagonistic
to the President's views. Some of the members were openly hostile to the
President, even in a personal way, particularly one representative from
the South, and some of the questions addressed to the President were
ungracious to the verge of open insult. It was an exasperating experience,
but Mr. Wilson stood the test with patience, betraying no resentment to
impertinent questions, replying to every query with Chesterfieldian grace
and affability, parrying every blow with courtesy and gentleness,
gallantly ignoring the unfriendly tone and manifest unfairness of some of
the questions, keeping himself strictly to the merits of the discussion,
subordinating his personal feelings to the important public business under
consideration, until all his interrogators were convinced of his sincerity
and fair-mindedness and some were ashamed of their own ungracious bearing.
It was clear to me as I watched this great man in action on this trying
occasion that in the cause he was defending he saw, with a vision
unimpaired and a judgment unclouded by prejudice or prepossessions, far
beyond the little room in which he was conferring. He saw the varied and
pressing needs of a great nation labouring now under a currency system
that held its resources as if in a strait-jacket. He saw in the old
monetary system which had prevailed in the country for many years a
prolific breeder of panic and financial distress. He saw the farmer of the
West and South a plaything of Eastern financial interests. And thus, under
the leadership of Woodrow Wilson was begun the first skirmish in the great
battle to free the credit of the country from selfish control, a movement
which led to the establishment of a financial system that ended for all
time the danger or possibility of financial panic.
There was an interesting incident in connection with the handling of the
currency legislation that brought about what threatened to be the first
rift in the President's Cabinet. It concerned Mr. Bryan's attitude of
opposition to certain features of the bill as drafted by the Banking and
Currency Committee of the House. My connection with this particular affair
arose in this way: In the early stages of the discussion of the Federal
Reserve Act, and while Mr. Glass's committee was considering the matter, a
messenger from the White House informed me that the President wished to
confer with me in his study. As I walked into the room, I saw at once from
his general attitude and expression that something serious was afoot and
that he was very much distressed. Turning around in his chair he said: "It
begins to look as if W. J. B. [he thus referred to Mr. Bryan] and I have
come to the parting of the ways on the Currency Bill. He is opposed to the
bank-note feature of the bill as drawn. We had a long discussion about the
matter after Cabinet meeting to-day. In thoroughly kindly way Mr. Bryan
informed me that he was opposed to that feature of the bill. Of course,
you know, W. J. B. and I have never been in agreement on the money
question. It is only fair, however, to say that in our discussion Mr.
Bryan conducted himself in the most generous way, and I was deeply touched
by his personal attitude of friendliness toward me. He even went so far as
to say that in order that I might not be embarrassed in the handling of
the bill, he was willing to resign and leave the country and make no
public criticism of the measure. In the meantime, Mr. Bryan has promised
to say nothing to any one about the matter until he has a further
discussion with me."
The President then frankly discussed with me the effect of the possible
resignation of Mr. Bryan. The President suggested that I drop in on Mr.
Bryan very soon and if possible casually invite a discussion of the
Federal Reserve Act, telling Mr. Bryan of his [the President's] interests
in it, and how much he appreciated Mr. Bryan's personal attitude toward
him.
I realized the seriousness and delicacy of the situation I was asked to
handle, and, being on the friendliest terms with Mr. Bryan, I telephoned
him and invited myself to his home--the old Logan Mansion, a beautiful
place in the northwest part of Washington. I found Mr. Bryan alone when I
arrived. We went at once to his library and, in a boyish way, he showed me
a picture which the President had autographed for him only a few days
previous. As we stood before this picture Mr. Bryan gave expression to his
sincere admiration and affection for the President. He related, with deep
feeling, how much Mr. Bryan had enjoyed his contact and official
companionship with him and how he had come to have a very deep affection
for him. As we turned away from the picture, he grew serious and began the
discussion of the very thing the President and I had conferred on only a
few hours before. He freely discussed his differences with the President
over the Federal Reserve Act, and asked me the direct question: "Who from
Wall Street has been discussing this bill with the President? I am afraid
that some of the President's friends have been emphasizing too much the
view of Wall Street in their conferences with the President on this bill."
I frankly told Mr. Bryan that this imputation did a great injustice to the
fine men with whom the President conferred on the matter of banking reform
and that I was certain that the President's only intimate advisers in this
matter were Mr. McAdoo, Senator Owen of Oklahoma, and Mr. Glass of
Virginia, and that I personally knew that in their discussions the
President never argued the point of view of the Eastern financial
interests. Mr. Bryan was reassured by my statement and proceeded to lay
before me his objections to the character of the currency issue provided
for in the bill. He then took from the library shelves a volume containing
all the Democratic National platforms and read excerpts from them bearing
upon the question of currency reform. He soon convinced me that there was
great merit in his contention. Before leaving him, I told him of my
interview with the President and how deeply distressed he [the President]
was that Mr. Bryan was not disposed to support him in the matter of the
Federal Reserve Act. It was evident that Mr. Bryan felt a keen sympathy
for the President and that he was honestly trying to find a way out of his
difficulties that would enable him to give the President his whole-hearted
support. He showed real emotion when I disclosed to him the personal
feelings of the President toward him, and I feel sure I left him in a more
agreeable frame of mind. I told him that I would talk with the President,
Mr. McAdoo, and Mr. Glass and report to him on the following day.
I returned to the President's study and reported to him in detail the
results of my conference with Mr. Bryan. I called his attention to Mr.
Bryan's criticism of the bill and then ventured the opinion that Mr.
Bryan, according to the traditional policy of the Democratic party, was
right in his attitude and that I felt that he [Mr. Wilson] was wrong. For
a moment the President showed a little impatience with this statement and
asked me to point out to him where the party in the National platforms had
ever taken the view Mr. Bryan indicated in his discussion with me. I then
showed him the book Mr. Bryan had given me, containing the Democratic
platforms, and he read very carefully plank after plank on the currency.
He finally closed the book, placed it on his desk, and said: "I am
convinced there is a great deal in what Mr. Bryan says." We then discussed
ways of adjusting the matter. I finally suggested that the President allow
me to talk with Mr. Glass and place before him Mr. Bryan's position and
that he have Mr. Glass confer with Secretary McAdoo and Senator Owen. This
was arranged. I had no way of ascertaining just what took place at this
conference, but after the Cabinet meeting on the following Tuesday Mr.
Bryan walked around to where the President was sitting, and said to him:
"Mr. President, we have settled our differences and you may rely upon me
to remain with you to the end of the fight." The President thanked him
cordially, and thus the first break in the Cabinet line was averted.