America's Bank: The Epic Struggle to Create the Federal Reserve (36 page)

the Bank of England acquired:
Walter Bagehot,
Lombard Street: A Description of the Money Market
(London, 1873). Bagehot stresses that the duty as lender of last resort was merely tacit, not written down or “acknowledged”—see especially pp. 25, 71.

In the famous phrase of Walter Bagehot:
Bagehot,
Lombard Street,
19, 21; see also ibid., 66-67, 78.

roughly twenty in all:
Forrest Capie, Charles Goodhart, and Norbert Schnadt, “The Development of Central Banking” (1994), available at http://eprints.lse.ac.uk/39606/1
/The_development_of_central_banking_%28LSERO%29.pdf. Specifically, its table 1.2, “The Number of Central Banks 1900–1990” (p. 6), states there were eighteen in 1900 and twenty in 1910. Background on central bank history and development is based on J. Lawrence Broz’s trenchant “The Origins of Central Banking: Solutions to the Free-Rider Problem,” delivered at the 1996 Annual Meeting of the American Political Science Association, and published in
International Organization
52, no. 2 (Spring 1998), 231–68.

the big three of European banking:
Bagehot,
Lombard Street,
16, 28, and 84–85.

In Germany, management was in the hands:
National Monetary Commission,
Interviews on the Banking and Currency Systems of England, Scotland, France, Germany, Switzerland, and Italy,
61st Cong., 2d sess. (Washington, D.C.: Government Printing Office: 1910), 336.

Morgan lost no time in requesting:
Stephenson,
Nelson W. Aldrich,
336.

Interviews at the Bank of England:
Biographer’s notes, Aldrich Papers, Reel 61.

naïve and unprepared:
Stephenson,
Nelson W. Aldrich,
335.

Matters improved after a few days:
“Minutes of Meetings of Monetary Commission.”

Aldrich also enlisted George Reynolds:
Stephenson,
Nelson W. Aldrich,
335; and Rockefeller, “Nelson W. Aldrich and Banking Reform,” 32.

Davison took the lead:
Biographer’s notes, Aldrich Papers, Reel 61; and Rockefeller, “Nelson W. Aldrich and Banking Reform,” 28.

Commercial banks kept:
Bagehot,
Lombard Street,
11–13.

had relatively little gold:
J. Lawrence Broz, “The Domestic Politics of International Monetary Order: The Gold Standard,” in
Contested Social Orders and International Politics,
ed. David Skidmore (Nashville: Vanderbilt University Press, 1997), 53–91.

Aldrich liberally buying economics books:
Biographer’s notes, Aldrich Papers, Reel 61; and Stephenson,
Nelson W. Aldrich,
337–38.

the group ventured to Berlin:
Andrew,
Diary;
and “Chronology on Monetary Commission Work of Senator Aldrich.”

a dispatch written by Napoleon:
National Monetary Commission,
An Address by Senator Nelson W. Aldrich
Before the Economic Club of New York,
November 29, 1909, 61st Cong., 2d sess. (Washington, D.C.: Government Printing Office, 1910), 28.

suggested that Aldrich gather:
Frank A. Vanderlip with Boyden Sparkes,
From Farm Boy to Financier
(New York: D. Appleton-Century, 1935), 211.

Andrew and the Davisons:
Andrew,
Diary.

the interviews:
Biographer’s notes, Aldrich Papers, Reel 61; and National Monetary Commission,
Interviews.

Davison and Aldrich pressed their hosts:
National Monetary Commission,
Interviews;
quotes come from pp. 31–32, 356, 201–2, and 212, respectively.

fifty-eight meetings:
Rockefeller, “Nelson W. Aldrich and Banking Reform,” 23; and Aldrich Papers, Reel 29.

Reynolds, the Chicago banker, maintained:
Stephenson,
Nelson W. Aldrich,
339.

safari in Africa:
Discussion of Roosevelt’s pending trip was public within weeks of the election: see, for example, “Explorers See Roosevelt,”
The New York Times,
November 21, 1908.

“I like your ideas”:
This anecdote is drawn from Warburg,
The Federal Reserve System,
1:56, and from “Aldrich Becomes Converted to Idea of a Central Bank, May–October 1908,” Aldrich Papers, Reel 61.

“It is easy to imagine”:
Warburg,
The Federal Reserve System,
1:56–57.

Warburg jumped into the fray:
Paul Warburg to Piatt Andrew, December 14, 1908, Aldrich Papers, Reel 28; and Warburg,
The Federal Reserve System,
1:33–34, 57.

a monument to his decades:
“Money Commission Meets,”
The New York Times,
November 23, 1908.

“he doesn’t like being pilloried continually”:
“Aldrich Weary of Senate,” ibid., November 2, 1908.

Aldrich intended to devote:
“Senator Aldrich Tells of His Trip,” ibid., November 19, 1908.

The commission certainly had plenty:
National Monetary Commission correspondence, Aldrich Papers, Reel 27. For New York State, see a banking department letter to Arthur Shelton, July 23, 1909, ibid.

“Really, gentlemen, I have nothing to say”:
Rockefeller, “Nelson W. Aldrich and Banking Reform,” 31–32, quoting the
Milwaukee Journal
.

Butler asked whether Aldrich:
Nicholas Murray Butler to Aldrich, January 25, 1909, Aldrich Papers, Reel 29; Aldrich’s reply is in ibid.

Woodrow Wilson turned down an invitation:
“Chronology on Monetary Commission Work of Senator Aldrich”; Frank Vanderlip to Aldrich, December 1, 1908, Aldrich Papers, Reel 28; and Vanderlip,
From Farm Boy to Financier,
211.

“What I am anxious to do”:
Henry F. Pringle,
The Life and Times of William Howard Taft
(New York: Farrar and Rinehart, 1939), 1:382 (italics added).

bruised his mentor’s ego:
Ibid., 384, 387–88.

conversation at dinner was strained:
Ibid., 392.

“It is coming to be an open secret”:
Vanderlip to Lord Revelstoke (Edward Charles Baring), January 27, 1909, Vanderlip Papers, Box 1–3. For a full and compelling account of the Taft-Roosevelt relationship, see Doris Kearns Goodwin’s
The Bully Pulpit:
Theodore Roosevelt, William Howard Taft, and the Golden Age of
Journalism
(New York: Simon and Schuster, 2013).

CHAPTER
SIX
: PROGRESSIVISM

“Neither the political prejudice”:
Nelson W. Aldrich,
National Monetary Commission,
An Address by Senator Nelson W. Aldrich Before the Economic Club of New York,
November 29, 1909, 61st Cong., 2d sess. (Washington, D.C.: Government Printing Office, 1910), 27.

“Financial questions are perplexing”:
Taft quoted in “Taft Advocates Currency Reform,”
The New York Times,
June 23, 1911.

He was bombarded with pleas:
Letters from U.S. Steel (April 6, 1909) and National Biscuit (April 19, 1909) to Aldrich are in Nelson W. Aldrich Papers, Reel 31; letter from Royal Weaving’s Joseph Ott to Aldrich (May 6, 1909) is in ibid., Reel 32.

Against these letters Aldrich had:
Ibid., Reels 31–33; see especially Reel 33, which contains Secretary of State Philander C. Knox to Aldrich, May 26, 1909, enclosing translation of a note from the Turkish embassy.

Always at ease working:
Nathaniel Wright Stephenson,
Nelson W. Aldrich: A Leader in American Politics
(New York: Scribner’s, 1930), 351.

“for a speedy end of the Tariff wrangle”:
Paul Warburg to A. Piatt Andrew, July 26, 1909, Aldrich Papers, Reel 35.

Andrew at least kept the Monetary Commission:
A. Piatt Andrew,
Diary of Abram Piatt Andrew, 1902–1914,
ed. E. Parker Hayden Jr. and Andrew L. Gray (Princeton, N.J., 1986), entries for June 29, 1909 (Wright), and April 27, 1910 (Gettysburg).

The tariff work thrust Aldrich:
For the Taft-Aldrich relationship during the tariff
legislation, see Henry F. Pringle,
The Life and Times of William Howard Taft
(New York: Farrar and Rinehart, 1939), 1:411–15; and Doris Kearns Goodwin,
The Bully Pulpit: Theodore Roosevelt, William Howard Taft, and the Golden Age of Journalism
(New York: Simon and Schuster, 2013), 593–94, 597. The source for the White House portico is Stephenson,
Nelson W. Aldrich,
351. Taft’s letter to Aldrich of July 29, 1909 (Aldrich Papers, Reel 35), in which the President remarks, “I regret exceedingly to differ with you upon this subject . . . ,” is suggestive of Taft’s reluctance to confront Aldrich.

The President had more success:
Walter Nugent,
Progressivism: A Very Short Introduction
(New York: Oxford University Press, 2010), 84.

Aldrich did agree, reluctantly:
See the fascinating recollection “Notes on an Interview with A. Piatt Andrew,” February 1, 1934, on mimeograph in the A. Piatt Andrew Papers. The interviewer, Andrew L. Gray, wrote that “Aldrich told me in personal conversations that his own inclination would have been to liberalize [reduce the duties] considerably but that he could not do so without letting down his old associations who had stuck by him through thick and thin.”

“meets the full approval”:
James W. Van Cleave of the National Association of Manufacturers to Aldrich, May 19, 1909, Aldrich Papers, Reel 33. For appraisals of the Payne-Aldrich tariff, see Pringle,
William Howard Taft,
1:425; Robert H. Wiebe,
Businessmen and Reform: A Study of the Progressive Movement
(Chicago: Elephant, 1989), 95; Stephenson,
Nelson W. Aldrich
357–58; and Arthur S. Link,
Wilson,
vol. 2,
The New Freedom
(Princeton, N.J.: Princeton University Press, 1956), 178.

Senator Jonathan Dolliver of Iowa:
Goodwin,
The Bully Pulpit,
593.

La Follette and other progressives:
Richard T. McCulley,
Banks and Politics During the Progressive Era: The Origins of the Federal Reserve System, 1897–1913
(New York: Garland, 1992), 226.

Albert B. Cummins:
“Cummins Will Give No Quarter in Fight,”
The New York Times
,
November 7, 1909.

“distrusted, disliked, even hated”:
“Aldrich the Master of Details,”
Current Literature
47 (August 1909), 145–47.

a second European study tour:
“Chronology on Monetary Commission Work of Senator Aldrich,” Aldrich Papers, Reel 61. For the meeting with Churchill, see Michael Clark Rockefeller, “Nelson W. Aldrich and Banking Reform: A Conservative Leader in the Progressive Era,” A.B. thesis, Harvard College, 1960, 34–35; and Stephenson,
Nelson W. Aldrich,
362.

The bankers in his circle:
Various correspondence in Aldrich Papers, Reels 35–37.

a barnstorming tour in the West:
Stephenson,
Nelson W. Aldrich,
363.

“I am particularly pleased”:
Henry Davison to Aldrich, August 6, 1909, Aldrich Papers, Reel 35.

“some interests of mine”:
Aldrich to Porfírio Diaz, August 28, 1909, ibid., Reel 36.

Aldrich by now was a very wealthy man:
Stephenson,
Nelson W. Aldrich,
367; Carrere and Hastings (architects) to Aldrich, July 15, 1910, Aldrich Papers, Reel 42; and Senator Boies Penrose to Aldrich, March 25, 1910, ibid., Reel 41. Reel 61 of ibid. is replete with stock transactions, many of them substantial.

Even ordinary Americans:
Various correspondence, Aldrich Papers, Reels 30, 37. Ravenscroft’s book appeared in 1911.

The most interesting proposal:
Victor Morawetz,
The Banking and Currency Problem in the United States
(New York: North American Review Publishing, 1909); see especially 45–46, 84–86.

“Wall Street influences”:
“Taft with Aldrich for a Central Bank,”
The New York Times,
September 15, 1909.

nine midwestern cities:
“Chronology on Monetary Commission Work of Senator Aldrich.”

“one which will satisfy the manufacturers”:
Rockefeller, “Nelson W. Aldrich and Banking Reform,” 35, 54.

Local coverage tended:
National Monetary Commission (probably A. Piatt Andrew) to Paul Warburg, November 19, 1909, and unidentified Milwaukee newspaper clipping, both in Aldrich Papers, Reel 61.

“What do you do when you”:
Quoted in Rockefeller, “Nelson W. Aldrich and Banking Reform,” 74.

“the ghost of Andrew Jackson”:
An Address by Senator Nelson W. Aldrich Before the Economic Club of New York.

Although Warburg and he:
Paul M. Warburg,
The Federal Reserve System: Its Origin and Growth—Reflections and Recollections
(New York: Macmillan, 1930), 1:57.

“The universal American nation”:
Paul Moritz Warburg Papers, Folder 91.

Warburg believed that if Americans:
Warburg,
The Federal Reserve System,
2:160.