Glass-Owen Bill. Although there were initially some minor differences between Glass and Owen on the proper degree of government control over banking, Owen was basically of identical mind to Willis and Laughlin. While serving in the Senate, he also was the president of a bank in Oklahoma. Like Aldrich, he had made several trips to Europe to study the central banks of England and Germany, and these were the models for his legislation.
The less technically minded members of the cartel became nervous over the anti-Wall Street rhetoric of the Bill's sponsors.
Warburg, in an attempt to quell their fears and, at the same time, strengthen his private boast that he had been the real author, published a side-by-side comparison of the Aldrich and Glass proposals. The analysis showed that, not only were the two bills in agreement on all essential provisions, but they even contained entire sections that were identical in their wording.1 He wrote:
'Brushing aside, then, the external differences affecting the 'shells,'
we find the 'kernels' of the two systems very closely resembling and related to one another.'2
It was important for the success of the Glass Bill to create the impression it was in response to the views of a broad cross section of the financial community. To this end, Glass and his committee staged public hearings for the announced purpose of giving everyone a chance for input to the process. It was, of course, a sham. The first draft of the Bill had already been completed in secret several months before the hearings were held. And, as was customary in such matters, Congressman Lindbergh and other witnesses opposing the Jekyll Island plan were not allowed to 1. Warburg, Vol. I, p. 98.
2.
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THE CREATURE FROM JEKYLL ISLAND
speak.1 The hearings were widely reported in the press, and the public was given the impression that the favorable testimony was truly representative of expert opinion. Kolko summarizes: Although they were careful to keep the contents of their work confidential, to aid the passage of any bill that might be agreed upon Glass deemed it desirable to hold public hearings on the topic and to make sure the course of these hearings was not left to chance.... The public assumption of the hearing was that no bills had been drafted, and Willis' draft was never mentioned, much less revealed.... The hearings of Glass' subcommittee in January and February, 1913, were nothing less than a love feast.
BANKERS BECOME DIVIDED
The public was not the only victim of deception. The bankers themselves were also targeted—at least the lesser ones who were not part of the Wall Street power center. As early as February, 1911, a group of twenty-two of the country's most powerful bankers met for three days behind closed doors in Atlantic City to work out a strategy for getting the smaller banks to support the concept of using the government to authorize and maintain their own cartel.
The objective frankly discussed among those present was that the proposed cartel would bring the smaller banks under control of the larger ones, but that this fact had to be obscured when presenting it to them for endorsement.
The annual meeting of the American Bankers Association was held a few months later, and a resolution endorsing the Aldrich Bill was steam rollered through the plenary session, much to the dismay of many of those present. Andrew Frame was one of them.
Representing a group of Western bankers, he testified at the hearings of the Glass subcommittee, mentioned previously, and described the hoax:
When that monetary bill was given to the country, it was but a few days previous to the meeting of the American Bankers Association in New Orleans in 1911. There was not one banker in a hundred who had read that bill. We had twelve addresses in favor of it. General Hamby of Austin, Texas, wrote a letter to President Watts asking for a hearing against the bill. He did not get a very courteous answer. I refused to 1. Lindbergh, p. 129.
2. Kolko,
3. Rothbard,
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vote on it, and a great many other bankers did likewise.... They would not allow anyone on the program who was not in favor of the bill.1
It is interesting that, during Frame's testimony, Congressman Glass refrained from commenting on the unfairness of allowing only one side of an issue to be heard in a public forum. He could hardly afford to. That is exactly what he was then doing with his own agenda.
As the Federal Reserve Act moved closer to its birth in the form of the Glass-Owen Bill (Owen was the co-sponsor in the Senate), both Aldrich and Vanderlip threw themselves into a great public display of opposition. No opportunity was overlooked to make a statement to the press—or anyone else of public prominence—
expressing their eternal animosity to this monstrous legislation.
