HfiTT"
f
The Commoner
MARCH, 1922
6
r I
fM
John Skelton Williams on Adminis
tration of Federal Reserve Board
Richmond, Va, December 31, 1D21.
Dear Editor:
I take the liberty of handing you with this
a copy of my letter to Senator Overman of De
cember 2, 1921, concerning the administration
of the Federal Reserve Board, which on motion
of the senator, and with the unanimous consent
of the United States Senate, was printed in the
Congressional Record of December 19, 1921.
In submitting this letter I invite yoUr atten
tion to the fact that the Federal Reserve Board,
in its official report to the Senate in answer
to the Overman resolution, asking for the official
figures, concerning the "amazing waste of pub
lic money,1' has confessed to things which
prove that conditions are much worse than had
been charged; that the banking palace at New
York, instead of costing. "$10,000,000," is esti
mated to cost $25,646,000, or 60 per eent more
than the Capitol at Washington; and that the
salaries of its "officers" aggregated about 14
per cent more than the amount charged, which
had seemed incredible.
On the floor of the Senate December 19, 1921,
Senator Overman In referring to the3oard's re
port to the Senate said (p. 605 Congressional
Record) :
"I want to bring before the Senate the ques
tion as to the extravagant use of money. I asked
for a report concerning the matter and a report
has been submitted ADMITTING THE FACTS."
Senators, regardless of party affilrations, have
joined in condemning the gross extravagance
and "amazing waste of public money" which
now stands revealed and established. I aslc at
tention to the following statements which were
made in the United States Senate on December
19, 1921, during a discussion of certain pro
posed amendments to the Federal Reserve Act
intended to remedy existing abuses:
Senator Overman, Democrat, of North Caro
lina, said:
"Mr. President, I think the. greatest piece of
constructive legislation passed in a hundred
years was the Federal Reserve Act. It has
probably avoided many panics. It helped us to
carry on the war. That bill was -passed in the
interest of the people..
"On account of certain charges made on the
floor of the Senate and in the press throughout
the country of an amazing waste of money and
extravagance on the part of certain Federal re
serve banks, I introduced a resolution asking
the Federal Reserve Board whether those
charges were true or not.
"Their report in reply to that resolution has
come in, and I wish senators would read it.
There are some of the most amazing statements
contained in it. One statement is that they
have spent more than $17, 00 0,000 for a bank
building iu New York the finest, most extrava
gant bank building in the world, costing more
than any public building in Washington; more
than the Capitol in which we sit here, which
cost $15,000,000. They paid the architect and
engineer more than $1,000,000. They appropri
ated $800,000 for furniture.
'In the last few years they have spent $36,
000,000 for public buildings in various places in
the country. Besides that they have increased
salaries since 1919 when everybody else was re
ducing salaries. In an amazing manner they
nave increased the salaries in the several dis
tricts in an amount in excess of $7,000,000.
iiiey have been making so much profit after get
ting the law amended so they could retain 100
Per cent surplus, that they did not know what
jo do with it, so they are wasting it by increas
ing salaries over $7,000,000 since 1919, and by
erecting these extravagant, magnificent build
K?i',one of wnich cost more than any public
itself in WashinSton, more than the Capitol
n?efei'ring t0 tue extravagant expenditures in
SSn?otlon with tfle New York Reserve Bank,
senator McLean, Republican, of Connecticut,
ww (p. (505 Congressional Record):
tim told tnls expenditure was made under
SS aufurity of the board of directors of the
federal Reserve Banks."
o which Senator Overman replied:
Rp!, wa a11 under tu control of the Federal
tw e ?oard and if they did not disapprove it
a W, t0 have done ao
dintS flmilar situation seems, to exist in every
of ti ' as 3udse- from Mr; William's analysis
his n wh?le tnInS- J hPe senators will read
18 analysis in order that they may familiarize
f?lveBwlth the amazie waste of money
and the extravagance which has been apparent
on the part of the Board." hi
During the same discussion Senator Overman
also said to the Senate:
''That is the question before the Senate, but
I Wanted to bring before the Sonato the ques
tion as to the extravagant use of money. I
asked for a report concerning the matter, and
a report has been submitted admitting the facts.
There should be some one on the Federal Re
serve Board representing the farming interest.
There has been just criticism of the Board, and
I hope some good may come from it. I believe
the Federal Reserve System is a great system;
we could not do without it; but -it is necessary
that the Board should have the confidence of
the people. If, however, they go on and con
tinue spending money in the way they have
done in the past they will lose the confidence
of the people.
"I trust that this criticism may bring about
some reform. I think it is a just criticism."
Senator Norris, Republican, of Nebraska, who
took part in the debate, declared very unequivo
cally: "I should like to prevent the erection of any
of these buildings without the consent of congress
if I could and if the amendment is not worded
properly it ought to be changed so that it would
carry out the intent which we have in mind."
(p. 615).
At the conclusion of Senator Overman's de
nunciation of the extravagance which has been
disclosed, Senator Heflin, Democrat, of Alabama,
made the following statement to the Senate:
"Mr. President, if my friend from North Caro
lina will permit me just a moment I desire to
suggest that the senator from Connecticut a lit
tle while ago reminded the senator from North
Carolina that the members of the Federal Re
serve Board were Democrats that is, that they
were going under the name of Democrats at the
time they were appointed, and I suppose they
were Democrats at that time; but I read upon
this floor an article from the "Washington
Times which was printed, I believe, in April
of this year, stating that Governor Harding,
who is holding his position at the head of that
Board, had supported the Republican ticket last
fall, and that it was understood that 'the pow
ers that be' were very friendly to him. I do
not care whether he is a Democrat or a Repub
lican; that does not enter into this matter.
Those who have been intrusted with power oyer
the currency and credit of this country ought
to be made to perform their duties, whether
they are Democrats or Republicans. If men
change their politics in order to suit the incom
ing administration, that is a reason why they
should be removed more quickly, because if they
will do that for that purpose, they will also
change their policies to please some other pow
ers in this country."
In a speech in-the Senate on October 3, 1921,
prior to the introduction of the Overman reso
lution, Senator Heflin had called attention to
the reports which were current concerning the
gross extravagance and waste in connection with
the Reserve Banks; especially in the matter of
salaries. During the discussion on that day
(p. 6646 Congressional Record) Senator Smoot,
Republican, of Utah, said:-
"Those salaries that are being paid in the city
of New York.wereTiever made public until just
the other day." '
The following discussion then ensued.
' Senator Heflin: Congress has the power to
limit these salaries. How long since the senator
knew that these salaries had been so greatly in-
'Xltor Smoot: "I think it was about two
WeSena?o?Heflin: "Has the senator made any
protest to the Federal Reserve Board?
Senator Smoot: "I certainly have."
Senator Smoot closed his discussion of the
subject that day with the following plain cate
gorical statement (p. 664G):
"I do not think there is any dispute as o the
nninrfes being paid; I have not heard of it, and
?Stak tSf will oe an effort made , tc see that
raaTdey SeTatol Heflin during the d.scussion in
fore a change came over the spirit of the dream,
of the Federal Rcsorvo Board, tho board func
tioned properly, and I wish to say a word of
praise for it from tho timo it was appointed up
to 1920. In 1920, howovor, it failed to function
proporly; it ceased to bo of valuo to honest
banking businoss in America, and, consciously
or unconsciously, became the obedient servant
of Wall Street
"Tho conduct of tho Fodoral Reserve Board
for several months pnst has boon misorablo, in
excusable, and indefensiblo. It has boon criti
cized and condemned by farmers, merchants and
bankers and others all over tho country, and Itrt
conduct will go down in tho history of this do
cado as a crime .against agriculture, commerce
and honest banking in tho United States.
"Thoro can bo no sound defense of that .
Board's donation conduct, and I do not know
why tho President continues to hold it in pow
er. "The cattle industry of tho United States haa
been prono upon the ground by this policy. Tho '
cotton industry of the south is prostrate today,
and cotton is selling below tho cost of produc
tion; yot tho Federal Reserve Board officers sit
back and fan themselves in tholr comfort and
put up a marble temple, a banking institution
in ono city costing nearly $30,000,000. What
right had they to raise the discount rate from
3 to 7 per cent and accumulate that money
take it away from tho poor, struggling indus
tries of tho country and hold it, and then dish it
out to build a marble banking tomplo in Now
York, with its bronze doors costing $25,000 each,
and increasing tho salaries of that bank's of
ficials? My good friend, tho able senator from
North Carolina (Mr. Overman) told you a little
while ago of the enormous increase in those
salaries.
"This is such a serious question I do not in
tend to let any opportunity pass without bring
ing it tho attention of congress, the President
and the country. I hopo that some timo ho will
wake up to a full realization of just what ia
going on as a result of tho destructive policy
of the Federal Reserve Board. I do not know
who is advising tho President, but I know that
the President must tako tho responsibility. Ho
muBt bear it. We are entitled to lay it at hia
door. Speeches have been made in this body
time and time rigain, and some in the othor
branch of congress, in criticism of tho Board.
NOBODY HAS EVER DEFENDED THE CON-:.;
DUCT OF THIS BOARD; NOBODY CAN "DE
FEND IT."
COMPARISON WITH LORD BRYCE'S DE
SCRIPTION OF THE "TWEED RING"
A number of letters which I have received
compare tho extravaganco and waste displayed
in connection with tho New York Reserve Bank's '
$25,000,000 banking palace with the days of tho
Tweed scandal in Now York City. Ono gentle
man of exceptionally high standing, a man of
affairs and large experience but whom I have
never met, wrote as follows:
"If you think the Tweed Ring in their, days
and ways was any comparison with the Federal
Reserve Board transaction, you misapprehend
the size.
"I lived in those days, and I remember their
sensations, which wore tame when -xjomparod
with these.
"If only the same men who got after Tweed ' .
could get after these, they would prove an orna
ment to the generation and have a life estate
that would perpetuate the recollections.
"Then the sufferance was in one state, confined
to the city of New York; now the dominion is
vast, broadcast throughout the United States."
Upon receipt of his letter I looked up tho
history of the notorious case to which he re
ferred. Viscount Bryce in "Tho American
Commonwealth" gives a vivid and illuminating
account of tho operations of the so-called
"Tweed Ring" in New York in 1870-1871. After
giving instances of corruption, reckless prodi
gality and wild extravagance and waste, he says:
"But all the othor financial achievements of
tho ring pale their Ineffectual fires-besides those
connected with the erection and furnishing of
tho County Court House."
The amount which had been expended on that .,
building, he says, "was variously estimated from .
$8,000,000 to $13,000,000."
Tho astounding fact has now been established
that the Federal Reserve Board and the New
York Reserve Bank have apparently sanctioned
""the expenditure for elaborate and costly banking
quarters in New York of more than $25,000
000, OR TWICE AS MUCH AS THE AMOUNT
ALLEGED TO HAVE BEEN EXPENDED BY .,
THE NOTORIOUS TWEED RING, IN .THEIR:
ORGY OF EXTRAVAGANCE FOR THE COUr.' ,
TY COURT HOUSE IN NEW YORK CITY, an.d.j
in comparison with which Lord Bryce said:. "All ',,',,
' t
ii.
if
m
A
.'4
. 'V
ett'l
,h
MW
At
1 r
n
J
ri
!!.
4?
.1
A
k
:.
vd
"; ;
'&A
J4
.
'
.
v
.J,
"If
t
i
ri
..' Jf
,. m
'
.j.
Ml
"I
i
M
Cf
1
?v
m
,?i
, ,
Mir
.
-L.
ThCBi V .