National Affairs: One Day, Two Miracles

Businessmen who want to avoid unwelcome callers announce that they are busy, can see no one who has not an appointment. The U. S. Senate has a better system. By refusing to tear off the top sheet on its legislative appointment pad, it can make one day last indefinitely, keep unwelcome bills at bay for weeks. Thus on the evening of May 13 the Senate by recessing instead of adjourning refused to tear off the top sheet of its pad, and the legislative day went gaily on. The Senate passed the Labor Relations Bill, gave NRA a shadow-lease on life, approved the TVAmendments, upheld the President’s Bonus veto, heard Huey Long through a record one-man filibuster, extended nuisance taxes, passed the Social Security Bill, took a long week-end off over July 4, and adopted the AAAmendments—all in one day’s work. Last week it was still May 13 in the Senate when that body passed the Banking Act of 1935. Then, by adjournment, the Senate called it a day, ripped 75 days from its calendar and caught up with the rest of the world.

Passage of the Banking Bill was a fitting end for one day’s work in the Senate because two political miracles had been achieved thereby. Credit for both went to Senator Carter Glass of Virginia.

Three months ago the House first passed the Banking Bill sent it by Governor Marriner Stoddard Eccles of the Federal Reserve Board. Lest Senator Glass, known to be opposed to the Eccles bill, should change it, his Senate subcommittee on Banking & Currency was packed with friends of the New Deal and Chairman Fletcher was set as a watch dog over him. Senator Glass refused to be hurried. He insisted on hearing everyone. Unable to outvote his fellow committeemen, he spent two months educating them in the problems of banking. Bit by bit he won them around by logic, bit by bit got Governor Eccles’ friends to compromise, bit by bit got the bill changed.

The Eccles bill placed the Federal Reserve Board under the thumb of the President by giving him power to appoint and remove at will the Governor and Vice Governor. To this Administration-controlled Board it gave centralized powers to fix rediscount rates and conduct open-marketoperations (powers that had previously belonged to the twelve regional Reserve Banks throughout the land); authority to alter reserve requirements, and to admit or deny virtually any collateral for rediscount. As the bill emerged after Senator Glass had worked on it, the Federal Reserve Board (renamed the “Board of Governors of the Federal Reserve System”) would be composed of seven members, only four of them belonging to the same political party. The Secretary of the Treasury and the Comptroller of the Currency would no longer be ex-officio members, thereby tending to reduce, instead of increase. Administration control. The Glass bill would then centralize authority but in a more limited degree: the twelve regional Reserve Banks would still initiate their rediscount rates, would have five votes out of twelve in controlling open-market operations; power of the Reserve Board to alter reserve requirements would be limited. In short, save for its title, there was hardly a word or a comma of the Eccles bill remaining and Senator Glass got this much-altered measure reported unanimously to the Senate (TIME, July 15). Such was the first political miracle.

The second political miracle took place last week in the Senate. What a resolute and logical chairman can do in committee is generally much more than what he can do on the floor of the Senate. Observers agreed there would be a desperate fight on the Senate floor, that Administration followers and radical Senators might even succeed in changing the Glass bill back into the Eccles bill.

Carter Glass opened the debate by giving the Senate a two-hour lecture on banking problems and the history of the Reserve System. He denounced central banking, showed why it had been rejected when the Reserve System was founded. He denounced Marriner Eccles without mentioning his name. “It is simply shocking, it is appalling to think that the newest member of that Board, who never had a day’s association with the Federal Reserve System in his life, proceeded within less than 90 days after his nomination to propose revolutionary changes in all the fundamental provisions of the law! . . .

“It is suggested that the chief advocate of Title II [Governor Eccles] . . . wants to prevent inflation. … I am amused at the pretense. … Of all the inflationists in the country he has exceeded the group in his advocacy of inflation. . . .”

Defending his bill Carter Glass let the chips fall where they might. One chip pinged against a man whom Senators took to be Chairman Winthrop W. Aldrich of Manhattan’s Chase National Bank: “The gentleman who has made the most furor about this provision [to permit a banker to be a director of his own and one other bank] is a great banker whose institution engages in more vicious and hurtful transactions than any other bank on the American continent and lost millions upon millions of dollars in the process. He seems to entertain a jealousy of one or two private bankers in his city, and through his jealousy of them and enmity toward them he has stirred up a fuss about thisinterlocking-director business. . . .”

When Senator Glass had done, it was time for opponents to tear into his bill. Senator Nye got up and made a three-hour oration proposing as an amendment Father Coughlin’s pet idea: a Government-owned central bank. The Nye-Coughlin amendment, put to a test, got only ten radical votes. Senator LaFollette proposed an amendment to strike out a provision of the Glass bill which would permit banks to do a limited business in underwriting security issues. It was beaten 39 to 22. The Glass bill was passed, without a record vote, without changing so much as a comma in the measure as it came from committee. Such was the second political miracle.

Carter Glass’s victory was not yet complete. It needed one more miracle: to get his bill approved in conference without material amendments. But with a minimum of compromise he had already a first-rate achievement to his credit. By logic, patience and a carefully prepared case he had taken an Administration bill, and singlehanded, made it over into something quite different, won strong support for it in a Senate topheavy with Administration sympathizers and economic radicals. “It was the triumph,” wrote Correspondent Arthur Krock of the New York Times, “of a reputation and a man.”