Jekyll_text

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444 THE CREATURE FROM JEKYLL ISLAND COMPETITION IS A SIN 445
their affairs with foreign investment houses. Nor were they asked
about their response to competition from new banks. There were
no questions about their plan to protect the speculative banks from
currency drains; or their motive for wanting artificially low interest
rates; or their formula for passing on their losses to the taxpayer.
The public was given the impression that Congress was really
prying off the lid of scandal and corruption, but the reality was
more like a fireside chat between old friends. No matter what
vagaries or absurdities fell from the bankers' lips, it was accepted
without contest.
These hearings were conducted largely as a result of the public
accusations made by Congressmen Lindbergh and Senator
LaFollette. Yet, when they requested to appear before the Committee,
both of them were denied access. The only witnesses to testify
were the bankers themselves and their friends. Kolko tells us:
Fortunately for the reformers, the Pujo Committee swung into
high gear in its investigation of the Money Trust during the summer of
1912 and for eight months frightened the nation with its awesome, if
inconclusive, statistics on the power of Wall Street over the nation's
economy.... Five banking firms, the elaborate tables of the committee
showed, held 341 directorships in 112 corporations with an aggregate
capitalization of over $22 billion. The evidence seemed conclusive, and
the nation was suitably frightened into realizing that reform of the
banking system was urgent—presumably to bring Wall Street under
control....
The orgy of Wall Street was resurrected by the newspapers, who
quite ignored the fact that the biggest advocates of banking reform
were the bankers themselves, bankers with a somewhat different view
of the problem.... Yet it was largely the Pujo hearings that made the
topic of banking reform a serious one.
Kolko has touched upon an interesting point. Almost no one
put any significance to the fact that some of the biggest bankers on
Wall Street were the first marchers to lead the parade for banking
reform. The most conspicuous among these was Paul Warburg of
Kuhn, Loeb & Company who, for seven years prior to passage of
the Federal Reserve Act, travelled around the country doing
nothing but giving "reform" speeches and writing scholarly articles
for the media, including an eleven-part series for The New York
Times. Spokesmen from the houses of Morgan and Rockefeller
joined in and made regular appearances before professional and
political bodies echoing the call
attention to the unmistakable odor of fish.
for reform. Yet no one paid any
ENLISTING THE HELP OF ACADEMIA
The speeches and articles by big-name bankers were never
intended to sway the public at large. They served the function of
putting forth the basic arguments and the technical details which
were to be the starting point for the work of others who could not
be accused of having self-serving motives. To carry the message to
the voters, it was decided that representatives from the world of
academia should be enlisted to provide the necessary aura of
respectability and intellectual objectivity. For that purpose, the
banks contributed a sum of $5 million to a special "educational"
fund, and much of that money found its way into the environs of
three universities: Princeton, Harvard, and the University of Chicago,
all of which had been recipients of large endowments from
the captains of industry and finance.
was precisely at this time that the study of "economics" was
becoming a new and acceptable field, and it was not difficult to find
talented but slightly hungry professors who, in return for a grant or
a prestigious appointment, were eager to expound the virtues of
the Jekyll Island plan. Not only was such academic pursuit
financially rewarding, it also provided national recognition for
them as pioneers in the new field of economics. Galbraith says:
Under Aldrich's direction a score or more of studies of monetary
institutions in the United States and, more particularly, in other
countries were commissioned from the emergent economics
profession. It is at least possible that the reverence in which the Federal
Reserve System has since been held by economists owes something to
the circumstance that so many who pioneered in the profession
participated also in its [the System's] birth.
The principal accomplishment of the bank's educational fund
Was to create an organization called the National Citizens' League.
Although it was entirely financed and controlled by the banks
under the personal guidance of Paul Warburg, it presented itself
merely as a group of concerned citizens seeking banking reform.
The function of the organization was to disseminate hundreds of
1. Kolko, Triumph, p. 220.
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Galbraith, p. 121.