America's Money Machine

H ISTORY
11.
Advent of Storm
ALLOWED THE ADMINISTRATION seven months to
. . construct its new financial ark before the deluge ofthe First World
War. The immediate task was purely political-where to locate the regional
reserve banks provided by the Act. The Reserve Bank Organization
Committee, which meant, in short, Secretary ofthe Treasury William
Gibbs McAdoo and Secretary of Agriculture David F. Houston,* was
provided with $100,000 for its investigations.
The two officials fitted out a special car, organized a corps of secretaries,
and right after the New Year began a country wide tour to study the
advantages and disadvantages ofeach proposed reserve center. Hearings
were held in eighteen cities and concluded on February 18. Over two
hundred cities requested that their claims be heard. Certain decisions
were foreordained. The influence of New York City would be cut down
by lopping off New England and creating a reserve bank in Boston and
another in Philadelphia. Pittsburghers, led by Andrew Mellon,t protested
loudly at being neglected, urging the importance of their city as the
center of the steel industry. Baltimore was disappointed to lose out to
Richmond, Va., but this was inevitable considering Carter Glass's origins.
The grand tour was headline news subordinate only to such items as
Henry Ford's profit distribution of $10 million among his employees1_
*The Comptroller of the Currency was also a member, but he kept to a passive role.
t Head of the Mellon National Bank, and later to become "the greatest Secretary of the
Treasury since Alexander Hamilton."
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