Creature From Jekyll Island by G. Edward

seem almost obliged to form conclusions from impressions instead of from study.... I wish that I had more knowledge, more thorough acquaintance, with the matters involved.'1 To which Charles Seymour adds: 'Colonel House was indefatigable in providing for the President the knowledge that he sought.... The Colonel was the unseen guardian angel of the bill.'2

DEATH OF THE ALDRICH PLAN

The first task for the Jekyll Island team was to hold a funeral for the Aldrich Plan without actually burying it. Professor Laughlin had come to agree with Warburg regarding the inadvisability of having Aldrich's name attached to any banking bill, especially now that the Democrats were in control of both Congress and the White House, and he was anxious to give it a new identity. Writing in the periodical Banking Reform, which was the official publication of the National Citizens' League, Laughlin said: 'It is progress that the Aldrich plan came and went. It is progress that the people have been aroused and interested.' The League was now free, he said, to

'try to help in getting a proper bill adopted by the Democrats,' a bill that 'in non-essentials ... could be made different from the old plan.'3

It did not take long for the Democrats to bring forth their own proposal. In fact, that process had begun even before the election of 1912. One of the most outspoken critics of the Aldrich plan was the Democratic Chairman of the House Banking and Currency Committee, Congressman Carter Glass from Virginia. And it was Glass 1. Seymour, Vol. I, p. 160.

2. Ibid. William McAdoo, Wilson's Secretary of the Treasury, was indignant over the credit generally given to Paul Warburg for his part in the creation of the Federal Reserve because McAdoo felt he should have received the recognition. Later, we find Carter Glass similarly piqued over Seymour's interpretation of House's importance. Glass' book, Adventures in Constructive Finance, was written primarily to show that it was he, not House, who rightfully deserved such glory. But neither McAdoo nor Glass were part of the hidden power which is the focus of this study and neither had any inkling of who was really calling the shots.

3. Quoted by Kolko, Triumph, p. 222.

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who was given the responsibility of developing the new plan. By his own admission, however, he had virtually no technical knowledge of banking. To provide that expertise and to actually write the bill he hired an economics teacher from Washington and Lee University, Henry Parker Willis. We should not be surprised to learn that' Willis had been a former student and protege of Professor Laughlin and had been retained by the National Citizens'

League as a technical writer. Explaining the significance of this relationship, Kolko says:

Throughout the spring of 1912 Willis wrote Laughlin about his w o r k for the Glass Committee, his relationship to his superior, and Washington gossip. The advice of the old professor was much revered ' W h e n you arrive,' he wrote Laughlin concerning a m e m o r a n d u m he had written, 'I should like to show it to you for such criticisms as occur to you.' The student-teacher relationship between the two m e n was still prominent....

Laughlin, Colonel House, and Glass were to frequently consult with major bankers about reform, and provided an important and continuous bridge for their ideas while bills were being drafted....

Colonel House, in addition, was talked to by Frick, Otto Kahn, and others in late February, and the following month also met Vanderlip, J P Morgan, Jr., and other bankers to discuss currency reform.... To m a k e sure the reform was m o r e to the liking of bankers, a steady barrage of personal, unobtrusive communications with Glass, House, and Wilson was kept up throughout February and March.... The

[Citizens'] league was fulsome in its praise of Glass, and bankers felt greater and greater confidence as Colonel H o u s e began visiting Glass and showing interest in his currency measure....

The n e w President admitted ' h e knew n o t h i n g ' about banking theory or practice. Glass m a d e the same confession to Colonel House in November, and this vacuum is of the utmost significance. T h e entire banking reform movement, at all crucial stages, was centralized in the hands of a few m e n w h o for years were linked, ideologically and personally with one another.

THE GLASS-OWEN BILL EMERGES

In his Committee House Report in 1913, Glass objected to the Aldrich Bill on the following grounds: It lacked g o v e r n m e n t control, he said; it concentrated power into the hands of the larger New York banks; it opened the door to inflation; it was dishonest in its estimate of cost to the taxpayer; and it established a banking 1. Kolko, Triumph, pp. 219-28.

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monopoly. All of which was correct. What the country needed, Glass said, was an entirely fresh approach, a genuine reform bill which was not written by agents of the Money Trust and which would truly meet the needs of the common man. That, too, was quite correct. Then he brought forth his own bill, drafted by Willis and inspired by Laughlin, which in every important detail was merely the old corpse of the Aldrich Bill pulled from its casket, freshly perfumed, and dressed in a new suit.

The Glass Bill was soon reconciled with a similar measure sponsored by Senator Robert L. Owen and it emerged as the