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." 154Politically, the Federal Reserve Board was used to advance the election of thebankers candidates during the 1920s.The "Literary Digest" on August 4,1928, said, on the occasion of the Federal Reserve Board raising the rate tofive percent in a Presidential year:"This reverses the politically desirable cheap money policy of 1927, and givessmooth conditionson the stock market.It was attacked by the Peoples Lobby of Washington,D.C.which said that This increase at a time when farmers needed cheap money to finance theharvesting of theircrops was a direct blow at the farmers, who had begun to get back on theirfeet after theAgricultural Depression of 1920-21."The New York World" said on that occasion:"Criticism of Federal Reserve Board policy by many investors is not basedon its attempt todeflate the stock market, but on the charge that the Board itself, by lastyear s policy, iscompletely responsible for such stock market inflation as exists."A damning survey of the Federal Reserve System s first fifteen years appearsin the "North American Review" of May, 1929, by H.Parker Willis,professional economist who was one of the authors of the Act and FirstSecretary of the Board from 1914 until 1920.He expresses completedisillusionment."My first talk with President-elect Wilson was in 1912.Our conversationrelated entirely tobanking reform.I asked whether he felt confident we could secure theadministration of asuitable law and how we should get it applied and enforced.He answered: We must rely onAmerican business idealism. He sought for something which could betrusted to affordopportunity to American Idealism.It did serve to finance the World Warand to revise American 155banking practices.The element of idealism that the President prescribed andbelieved we couldget on the principle of noblesse oblige from American bankers andbusinessmen was not there.Since the inauguration of the Federal Reserve Act we have suffered one ofthe most seriousfinancial depressions and revolutions ever known in our history, that of1920-21.We have seenour agriculture pass through a long period of suffering and even ofrevolution, during which onemillion farmers left their farms, due to difficulties with the price of land andthe odd status ofcredit conditions.We have suffered the most extensive era of bank failuresever known in thiscountry.Forty-five hundred banks have closed their doors since the ReserveSystem beganfunctioning.In some Western towns there have been times when all banks inthat communityfailed, and given banks have failed over and over again.There has been littledifference inliability to failure between members and non-members of the FederalReserve System."Wilson s choice of the first members of the Federal Reserve Board was notespecially happy.They represented a composite group chosen for the express purpose ofplacating this, that, or theother big interest.It was not strange that appointees used their places to paydebts.When theBoard was considering a resolution to the effect that future members of thereserve system shouldbe appointed solely on merit, because of the demonstrated incompetence ofsome of their number.Comptroller John Skelton Williams moved to strike out the word  solely andin this he was 156sustained by the Board.The inclusion of certain elements (Warburg,Strauss, etc.) in the Board gave an opportunity for catering to specialinterests that was to provedisastrous later on."President Wilson erred, as he often erred, in supposing that the holding ofan important officewould transform an incumbent and revivify his patriotism.The ReserveBoard reached the lowebb of the Wilson period with the appointment of a member who was chosenfor his ability to getdelegates for a Democratic candidate for the Presidency.However, this levelwas not the dregsreached under President Harding.He appointed an old crony, D.R.Crissinger, as Governor of theBoard, and named several other super-serviceable politicians to other places.Before his death hehad done his utmost to debauch the whole undertaking.The System has gonesteadily downhillever since."Reserve Banks had hardly assumed their first form when it becameapparent that local bankershad sought to use them as a means of taking care of  favorite sons , that is,persons who had bycommon consent become a kind of general charge upon the bankingcommunity, or inefficientsof various kinds.When reserve directors were to be chosen, the countrybankers often refused tovote, or, when they voted, cast their ballots as directed by citycorrespondents.In thesecircumstances popular or democratic control of reserve banks was out of thequestion.Reasonableefficiency might have been secured if honest men, recognizing their publicduty, had assumed 157power.If such men existed, they did not get on the Federal Reserve Board [ Pobierz całość w formacie PDF ]