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The Commoner.
A Trust "Of Bankers and for Bankers
9
T.
II.
III.
15
7
15
15
Louis V. Post in Tho Public: When Nelson
W. Aldrich, chairman of the monetary com
mlMKion which has recently reported to eon
grosa, spoke at a Chicago banquet last fall in
behalf of the central" reserve plan as then pro
posed by the commission, he characterized that
plan inadvertently perhaps, but none tho less
truly it may be n providing for an organiza
tion "of bankers and for bankers."
After that speech tho plan was modified by
tho monetary commission so as to give it an ap
pearance of divesting banking interests of con
trol, and this alteration ought to be considered
in jidv.'inco of any further discussion.
Whether the gigantic organization is to bo for
bankers may bo considered later; whether it is
to bo of bankers, in the sense of being under
their control, wo shall consider now.
I.
At iho time of Senator Aldrich 's defense of
tho "proposed organization as ono "of bankers
and for bankers," there were to be, with
roforenco to tho mode of choosing them, four
classes of directors of tho central body; and in
tho bill as it has since been reported to and now
lies before congress, there are four such classes.
For convenience of reference those classes may
bo tabulated as follows:
PROPOSED PLAN
T. G cx-ofiieio.
II. 15 elected by branches.
I IF. 12 elected by branches (proportionally).
IV. 12 elected by classes II and III (no bankers
uAix-pi uanic directors. )
Total.
PENDING PLAN
cx-ofllcio.
elected by branches,
elected by branch on (nU i, ,
b , V " . w UG 11U11-
ankors, etc.)
IV. Jl elected by branches (proportionately.)
4G Total.
A brief examination of the foregoing table
nlnLmSnC,GU1, U bronco between the two
fctora. rg t0 t,lelr cl"ssIflcations of
As to Class I the plans are alike in resneet nf
tlll"cl; of directors, except t Imt oSe ox
offlclo director Is added, making a total of 7
ex-oflcio directors instead of G and of 4 G direc
tors in all instead of .15. The ex-officio ,1 P
ors, under the bill as finally eported and now
fV?n,gress' woul(1 consist of l governm
S' " lttX"lVn'QaUlQnt 0f the Unitedllates
ry, tho secretary of coSo an. uLf'
secretary of agriculture (no
torq nf ihn ip i uaiKers- re board of direc
themselves "arc ibe eSe uSJti-S1 aSt.'!ey
tho 15 branches, acting as LidIr?0t?rB of
voting power proportioned & ? but wllh
holdings of shares in ? 1th?,r1 reBPeetivo
number in the bUl L n(1CCltral bo(ly The
Class iv of tho pending bin ld Plan to
Penf b'm lfasZUlshVfttod0f SS In in tb
in its terms, fiom Class IV of nltPat,ons
Wo indicate It in tie t-ibln inth, eaPJ op 1)lau'
Glass IV of the former ? In, "arentheses in
in Class III o ?ho Sing Sill n Vm "Ethoses
wo shall QonBiawtSnhQona11
referred to, mistaken v !!'.?, ! ,Ifc ls csPally
tho central rosorvo 0rsaSl 5 inn' aS making
banking interests can nofcoS 0ne hUSh
t& -urse not
central directors L rSotS!
,. . ill TT ,1 TTT. i V.111 oo TA
(lireciors oi uiuhsus ij. uhu jxj., mo wm o im
ported provides for only 9 additional directors,
who aro to bo elected not by other directors
but by tho branches and under proportional
stock representation.
II.
We may now consider the probable effect of
those alterations, in divesting banking Interests
of tho control they would have had under the
plan which Senator Aldrich described as "of
and for bankers."
There was a clause in that earlier plan with
reference to tho directors of Class IV as dis
tinguished in the first column of the table above,
a loose clause which purported to place some
restraint upon the election of bankers as direc
tors of the central body. This clauso provided
that the 27 directors of Classes II and III should
elect 12 additional directors, who should "fairly
represent the industrial, commercial, agricul
tural and other interests of the country," and
who should "not he officers of banks." But by
the same clause "directors of banks" were "not
to bo considered as officers!"
This plan would have made it feasible to pack
the central board with at least 41 bankers in
the total of 45 directors. Even if the president
and congress and all the people of the United
States were opposed to its policies in public mat
ters, nevertheless a banking ring could easily
have controlled; for the governor of the Na
m f1 Reserve association, and three federal
officials, would have been tho only directors to
whom the united banks could not have dictated
the only ones who would not have been officers
or directors of banks if the banking ring wanted
an all-bankers board.
Ull;ieC?Ssarily greedy of Pwer for bankers
was that plan, and apparently this has been
eallzed. At any rate, the alterations disclosed
by a comparison of Classes III and IV of the fore
going table were made before tho bill was re
ported to congress; and in lieu of a probable 41
or more of bankers in a directorate of 45, there
s substituted a probable 27 or more of banker!
in a directorate of 46. uamteio
The provisions of the earlier plan for elect
ing central directors which we have dis
tinguished as Class III and Class IV have been
altered in the pending bill so as ostensibly 12
prevent control by bankers; but only ostensfblv
The net result, as the commission's report sho wi
and as indicated above, is a directorate which
dSectS influon? Ton7yt
d Sect y throuih . oi "POn non-ankers, but
themsdves g majrity of banker
While a cabinet minister is added to the oy
& WS tme,f S
WVOl $? fnar lale? "
and wHuUVoTr " thG"earlier Plan
the 12 MmJ. that
"sinn a7irivntral nm
try," and shall Ct hi Sfflo68? ? the C0lin"
may be "directors of hnnvL ?t banks" bu
reported and now pending tn61', ?le biH as
apply not to 12 ! di??ctow tS LPriV,8ion Would
discretion of 27 directors a" Cl,10Sen at th
bankers, but to 1C of ?tiie ?l ?7ho ny be
chosen directly by the "branch nBaWors to b
branch association i arltS hJ ,iat ons' Those
trolled by bankers (S least flvo Utely con"
directorates respectively 1 " Xtl?8 their
in making their choice of Tho J B bankers), hut
tral directors proeyfo10111, cen
Pending bill, the branches wliS fB Ul of th
and comprehensively limited Tn?e ?ecifically
generally admonished to ipJBtead of bGinS
sha 1 fairly represent the indU!SL?erBonD "wh
agricultural and other iStS-eSfo? ;i,C0,X1,llerclal
and forbidden to elect 'SnL ?le cuntry,"
cept "directors of banks'Smf f 1banks" -rscr
plan thev aro hi 11 nd under the for
to choose penS who?i?g biU requIr
agricultural, commercial Li?,1 Psent the
interests of the distrii? !, idU8,tPlal and other
officers nor, while " e 'vingdiSl,811! not be
trust companies, insurance coin?8 banlcR'
financial institutions" companies, or other
Because of that provision, and apparently for
VOLUME JL2, NUMBER U
no other reason unless it be tho addition nf a
secretary of agriculture to the central diru ,e
as a member ex-offlcio, it is gravely uriSift
banking interests could not control tho v
tional Reserve association!
For instance, the Chicago Record-Heni
which seems to hold a brief for the Ahri
scheme in any form the bankers approve S
against any they disapprove, has done a snntr,
ing bit of editorial cooing on the subject f rim
which we quote, referring to its iss'til 7,
January 10, 1912: S5Ue ot
"The commission's plan involves no 'domim
tion'- or concentration of power in bankPS
hands. One-half of the directors of the National
Reserve association will represent the agricul
tural, industrial and commercial interests and
they will not be connected in any way with bnnifa
or other linancial institutions." s
Fiddlesticks! Are not those representative-!
of "agricultural, industrial and commercial in
terests" to be chosen by bankers?
Green indeed must he be who supposes that
there could be "no 'domination' or concentration
of power in bankers' hands." Won't bankers
choose their own favorites in other business con
nections? Most certainly, if they have any; and
he must be decidedly unsophisticated who
imagines that bankers', favorites can not be
found in "agricultural, industrial and com
mercial circles." Even the nominal owner of
the Chicago Record-Herald should be above sus
picion of that degree of innocence. Hasn't his
affinity for bankers been so marked these many
years as to give rise in Chicago to the grimly
jocular story that he has chosen bankers in
advance for his pallbearers, with the idea that
as bankers have carried him all his life they
ought to carry him at the end?
But if tho bankers did happen to be so dis
interested as to choose the whole 15 representa
tives of "agricultural, industrial and commercial
interests" from business circles beyond their
own influence, and even if the 15 persons so
chosen were Spartanic in their independence of
the choosers, how would the matter work out?
It would work out nicely, for a banking ring,
instead of one-half the directors being indepen
dent, only 19 out of 46 would be so!
There would be to begin with, 15 bankers
and lo Spartan independents chosen by bankers.
if, then, the three members of the president's
.cabinet and the comptroller of the currency were
also Spartanic independents, we should have 4
Independents to add to the other 15, making 10
independents and only 15 bankers 34 in all.
bo far the bankers would be in a minority. But
observe that the bankers would elect 9 directors
by a proportional vote based upon their respec
tive investments in the capital of the central
body. These would be bankers, of course, if the
bankers wished it so; and who doubts that they
would wish it so if profit or power were in the
balance? "Presto!", then, and the bankers'
minority of 4 is turned into a bankers majority
oi s, the bankers having 24 representatives and
the independents only 19; 43 in all.
JJiVen this substantial majority of bankers
could grow without drawing from the 19 in
dependents. For two deputy governors, ex
offlcio directors of the central body, are to be
ciiosen by the other directors, who, with a vote
n lt ban,kers t0 19 independents, could choose
a Danker for one deputy governor by 5 majority,
S1JIL tanoUler banker for the other deputy
S!Er y 25 t0 19' hereby adding 2 to the
7 S fiBro.up, and givinS them a majority of
of 45 independents 2 G to 19 in a total
irnv1!.,!iler? !? onG more ex-officio director, the
6 to ? :th.e ccntral association, and as he
?tnt5 PP?l,nVjd by the President of the United
'1fT1(Int1,le count against the bankers'
i Mi o ,,i pyesident were against them ? Even
7 1,5 ?ieir majority would be C instead of
forHhif if li "ote bankers' ring flourish com
is Rn Z that di8advantage? The pending bill
sucl? S ' however, as to guard against any
totte r?n y' Sllght thougl1 its dangel'S b
shaVlSU11?, b111 Pvides that the president
governor of ntMs Gm director to bo the
p?Ew f H1? association, ho might be and
banker yfJ0TUld bo C0Pelled to appoint a
ba lerR J must select from 3 whom the
comnorf ?in,te; and if tllG appointee didn't
tlTrini limiSielf agreeably to the bankers' ring,
Vnr nn?,ld,removo hIm by a two-thirds vote
and thfa wnK 0f course; yes "for. cause"
of LIld(nfessitate tbe conversion of only
renrpsIS? l indePQndent directors who "fairly
nTS"'11?, agricultural, industrial and other
tiGv ! , the respectivo dictricts" from which
tricLa ,fosen by tlle "ankers of those dis
".is. .The president's appointee would be ft
i23SB
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