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tv   Legacy of Financial Reformer Sen. Carter Glass D- Virginia  CSPAN  September 9, 2020 1:34pm-2:32pm EDT

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>> much of today's financial regulatory system and creation of the federal reserve system is due to senator carter glass after the great depression. matthew fincke wrote a book at the virginia democrat who changed american banking titled the unlikely reformer, carter glass and financial reformation. >> today's talk by matthew p frank is something i've been looking forward to just because i like matt. i don't know anything about the subject so i'll be a all yours t today, also. matt comes to us, he's retired now, but spent the bulling of his career with the mutual fund association. he wrote what you described to me as a landmark book on mutual funds by oxford university press early in the last decade and followed it up with this book
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just like year, the unlikely reformer, carter glass and financial regulation. the format today, matt's going to talk for however long he wants. we have a few images to supplement then he'll take some questions, so come on up. welcome. >> i'd like to thank chuck and the other people at the historical society for having me here today. this is a strange introduction. i had a funny thing happen getting here. i live in chevy chase, maryland, and i didn't want to drive and look for a parking space so i called lyft and they came within a minutes. i was barely putting on a tie, learning how u to tie a tie again and when i get in as he was pulling away, i realized i did not put a belt on my trousers so i had visions of being on cspan with my trousers falling down, luckily, chuck brought me a belt. you're saved from that, if not
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my speech. i'll talk for 20, 25 minutes then take your questions. carter glass was a major figure in american history. a recent writer, richard farley, called him quote, the single most important lawmaker in the history of american finance. i think that's absolutely true, but very few people know about him today. i spoke recently at the historical society in lynchburg, virginia, where he's from, and nobody knew anything about glass. so that's what led me to my book. i want to say three things about glass. this is kind of my conclusion. three points. glass was a racist and a complete reactionary. he made his fame by getting the virginia constitution amend ed t the turn, the end of the 19th century, to prevent 95% of blacks in the state of virginia from voting. he was a democrat. he opposed 80% of the new deal.
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he was a total reactionary racist and he was that way in his own personal life. he hated change or reform, whatever you call it. he came to the senate in 1920. the senate then when glass arrived there, had operated, an operator run phone system, if you wanted to call somebody, you got the operator, agave he or show the number, they switched on automatic where you could actually dial yourself. glass insisted they go back to operator and they did. another example, he lived in lynchburg, virginia on the weekends, but at the may flower hotel in downtown washington for 25 years. he came in one morning to find out that the may flower had renovated its lobby and left the hotel in a huff. he did not like any kind of change. so the first point, reactiona ona rrr rrreactionary,
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both in personal and political life. second point, he made a major exception in the case of laws dealing with finance. he not only supported, but he authored three very important laws designed to curb the power of american finance. the federal reserve act of 1913, the glass steeg -steagall act o and portions of the securityies and change act of 19346789 so glass dislike d and distrusted government. he dislike and distrusted even more, wall street. the third point about glass is i think the most interesting. he, like me other wilsonian progressives, believed the way to deal with finance was not to attempt to regulate it. that regulation eventually would always fail. instead, the way the deal with financial power was to break it up. fragment it. so those are the three points about glass. reactionary, but made an exception of laws curbing finance and third, that he
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believed the way to curb finance was not through regulation, but through fragmentation. now let me talk about glass' background. he was born in lynchburg, virginia two years before the civil war. 1858. lynchburg was a perfectly southern town. glass remembered seeing rebel confederate soldiers up in the hills around lynch burg and he remembered the union cavalry riding through lynchburg. his family, like many southern families, was devastated by the civil war and reconstruction. glass had to stop his education at age 14. he was largely self-educated. he read shakespeare, like lincoln, he was self-educated and well educated. when he went to work at age 14, he started by selling newspapers on the corner in lynchburg. then became the assistant to the
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printer of the paper, called the printer's devil, then a printer, then reporter, theb then one of the editor, then the editor and when the owner of the paper wanted to sell it, he wanted to sell it to glass. glass was this great figure, young man in lynchburg, so the own owner arranged for people in lynchburg with money to lend glass the money to buy the newspaper. glass was an extremely successful publisher of the lynchburg news. he bought the other morning paper. bought the afternoon paper. he installed presses. wrote editorials dealing with everything from the case in france to reconstruction in the united states. he made for that time and that area, a lot of money. so like a lot of successful business people, he decided to go into politics in the late 19th century. there was only one party to be in in virginia then and in the south. the democratic party. so he became a democratic politician.
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he was elect ed to the state senate and he made his fame, virginia was redoing its constitution and like all the southern state, it was trying to find way not to give blacks civil rights and the right to vote and glass was the guy who came up with a formula in the virginia constitution that prevented most blacks and a lot of whites, from voting. believe it or not, that made glass a hero to white virginia. he was a big figure in the state, so he was elected to congress in 1902. glass is now in congress in 1902 as a democrat and he might as well not be there because the republicans had firm control of the national government. teddy roosevelt was in the white house. both houses had overwhelming republican majorities. so democrats like glass were pretty isolated. he wanted to go on the foreign affairs committee. he did not get that. he was put on the house banking committee. he had no background, no interest in bank iing, but that
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where he was put and glass, always the conscious driver read every article and book. he self-edge kayed himself on finance just as he had on shakespeare and the english poets. that the time, beginning of the 20th century, the united states was the only major industrial country in the world that did not have a central bank or similar mechanism to control the currency or address financial panics. engineland had the bank of engl, frans the bank of france, germany, the bank of germany. there was no such entity in the united states. a few business people and intellectuals worried about this, but nobody paid much attention. the economy was doing well. teddy roosevelt, the president, found banking very boring, which i agree with him, so nobody dealt with banking issues. then comes the panic of 1907. the worst financial panic this nation had had until 1929.
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a number of banks and trust companies in new york city fail. they threaten ed to bring down brokerage firms, insurance companies and the new york stock exchange. and indeed the city itself. there is no state r or federal entity that can deal with this kind of panic. we don't have a central bank or similar mechanism. the panic is stopped when one individual, j.p. morgan, had a small veinvestment banking firm went around and raised money from his friends on wall street and they raised money and res e rescued a number of failing banks and trust xcompanies. the panic stopped. morgue wan was kind of a hero a suddenly, congress realized we can't go on like this. as one of them said, we're going to have panics in the future and we won't have j.p. morgan with us forever. so there was a realization, at
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least mofrom the people who car about this stuff, that we need something like the bank of england or germany. the republicans are in full control of congress and they name a very powerful senator from rhode island, probably the most powerful republican senator. i can't think of anyone today of that stat chure and power. had a special committee of congress to draft legislation to provide the equivalent of the bank of england or germany. he assembles every expert he can think of in the united states. businessmen, bankers, profess professors. students of finance generally. they go overseas. meet with people in london, paris, berlin. and they develop a model called the aldrich plan for a very powerful u.s. central bank model largely on the bank of germany. it's going to be one main office. probably in new york city. it's not going to be government controlled. it's going to be controlled by
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private bankers. it's going to be a very powerful, private banking organization as the u.s. central bank modelled on the german central bank. i think had aldrich and his colleagues introduced that plan in 1908, 1909, 1910, even early 1911, it probably would have got enact ae chltd we came out of te panic. there was a sense we had to do something. aldrich had the power of the business community behind him, but republicans didn't act. one gets the feeling that they thought they were going to be in power forever. they had largely run the government since the civil war and probably they thought they would run it for another 50 years so they didn't do anything in those years. it wasn't until 1912 that aldrich introduces his plan in congress and by that time, the country had swung in a progressive way. the democrats had taken control of the house and with progressive republicans, they now had control of the senate and these democrats and
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republicans were not about to enact a conservative, private bank like aldrich was proposing. so the aldrich plan died. the house is now controlled by the democrats, the ball is in their court. and who do they name to prepare their version of a central banking type bill but carter glass. they don't know very much about him, but he's probably the only guy, at least in the democratic party in the house, who had ever studied banking issues, so almost by default, glass, a largely unknown, middle-aged southern democrat, gets named to devise a democratic plan. glass comes up with a scheme that very few people had talked about or thought of. he is not going to have a single central bank as they have in england, france and germany. he's going to have a series of regional reserve banks in 12 or 20 cities around the country. because he does not want all finance centered in new york.
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he wants it scattered around the country. he wants a bank, a central bank in the richmond area to help virginia banks. and farmers and merchants. he wants a california bank in sacramento or san francisco to help california farmers, merchants and bankers, so he comes up with this regional reserve banking system. of x number of reserve banks. he realizes he has to have somebody on top of this to at least coordinate these dozen or 20 reserve banks so he says i'll use control of currency. he's the top federal banking official whose main job it is to create, to authorize banks. if you want to get a bank charter at that time, you go to the state or federally and if you went federally, the control of the currency was the guy who gave you your license and oversaw you, so glass picks the control of the currency to sit on top of this regional ver aal
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banking system. one author had a very goodizati goodization. the aldrich plan was called a national association. glass called his the federal reserve association because it was federal in nature. now when glass comes up with this scheme, we don't know who the next president is going to be because it's early 1912 and we're headed toward the most famous election probably in american history, the 1912 presidential election. because we have three major candidates. the republican president, william howard taft. teddy roosevelt, who had been a republican president, but now broken with taft, forms the progressive party. and third, wood row wilson, a democrat governor of new jersey. nobody knows when glass comes up with this plan, who's going to be the next president. turns out wilson gets about 40% of the vote. is elected president. he and glass had never met, but
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glass contacts him and goes to visit him and glass says i got a great deal for you. i've come up with this banking scheme and glass and wilson kind of fall in love with each other. they're both southerners. they're both virginians. they're both racists. they both don't like a strong federal government, so glass' plan is just the kind of thing wilson would like and he does and he says, gee, carter eer, i like to just make one change. i don't want to give the job to the controller to be on top. why don't we have an independent board of disinterested people will sit on top of this regional system. glass exceeded to this, so we now have plan for a federal reserve system of 12 or 20 reserve banks in areas around the country under the general supervision of a board in washington, d.c. this gets presented in congress and all hell breaks loose. the republicans, most of them, conservatives, love the aldrich plan, and this is complete
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heresy. some h some hay seed from a country town in virginia is propose iin regional reserve plan when aldrich had proposed the greatest thing ever so they can't wait to kill glass' plan. a lot of the democrats are from the south and the west. anything with the name bank, they hate. andrew jackson's successors. so they oppose the idea of anything dealing with a national banking system or a federal banking system. so complete fragmentation but glass is very clever. while he makes deals left and right, gets the bill through the house of representatives, now goes to the senate. glass plays a big role in getting the bill through the senate. it's almost regarded as a miracle, but on christmas day, woodrow wilson signs into law the federal reserve act. and glass, while most americans don't know him, glass is a huge figure in american finance now
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and american politics. a year before, nobody knew his name. now he's a major figure, expert on american finance and american politics. an opening happens in the secretary of treasury. so wilson names glass to become secretary of the treasury. a virginia senator dies and the governor of virginia names glass to a term in the senate and glass is elected four more times. so there he is in 1920. the united states senator. i ought to go back and say, i said the most interesting thing about glass i thought was he didn't believe in regulation. the federal reserve believed in fragmentation. the federal reserve act reflects that kind of fragmentation. instead of one central bank, he has 12 regional reserve banks. fragment economic power. glass is now a senator. well respected. he's on the cover of "time
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magazine" a couple of times. and glass like anybody else watching the country in the late 1920s noticing the roars stock market. the stock market is going up 1927, 1928, 1929. and glass, like any other observer says -- notices what's happening is money from across the country is pouring into wall street. there were no federal or state limits on how much you could borrow. just what a bank would allow. in 1928 if you had $2,000 you could buy $10,000 worth of stock. it was 20% margin around. that meant if the stock went up another 2,000, you doubled your money because you were very highly leveraged and a lot of people did this. my wife's grandfather owned a farm outside of philadelphia. he put all of his money in the stock market on margin. my family was an immigrant
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family in new york and my father's older brother put all of his money in the market. and glass says, where is this money coming from? it's coming from all across the country. the bank in sacramento or wichita is not lending to local farmers and merchants. the bank in wichita is lending to chase manhattan in new york which is lending to merrill lynch to its customers. all the money -- not all the money, but a lot of money from across the country the pouring into wall street for broker's loans. glass is horrified by this. he's even more horrified when he finds out that the 12 regional reserve banks are lending money to the local banks who are lending that -- re-lending that money to chase manhattan bank or city bank or to merrill lynch or my uncle and my wife's
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grandfather. so the system glass had created in the federal reserve act to prevent concentration in new york is being used as a very efficient way to get that concentration. he's created i think the 12 reserve banks, 12 funnels make it easy for the money to go to new york city. and glass is horrified. his scheme designed to keep money in localities has been dashed by circumstances. and glass jumps up and down. he goes to the federal reserve board which he created and says you ought to do something. they say, it's not a bad idea. it is a little dangerous. we have to think about it. they blow him off. he gets ridiculed and he has a few colleagues in the senate, republicans and democrats, he gets ridiculed by wall street and lawrence publishing a book in may of 1929 called wall street and washington which calls glass and his colleagues a
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bunch of hay seeds. these uneducated country rubes are making fun of the greatest economic system the world has ever created. they're anti-darwin, et cetera. 1929, the stock market breaks, all kinds of people can't meet their margin requirements. they go bankrupt. they have to borrow money. people jump out of sky scrapers. all of a sudden the stream of money, we can see what happens when leverage reserves itself. there's devastation. congress decides it has to do something so this republican congress, guess who they name to right remedial legislation? an overwhelming controlled senate, republican-controlled senate names glass a democrat to head the committee and class
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starts preparing a bill to prevent this from happening again. his main concern is this vast river of gold. he puts provisions in his bill that limits how much a bank can lend to buy stocks, to brokerage firms. so glass addresses what he saw the big problem as, and at that point glass, i suspect, was probably ready to go home. he was going to turn his bill in, hope to get it through congress. but two other things come along. one is deposit insurance. in the late 1920s and early 1930s, banks around the country -- i think 5,000 banks failed. mostly in farming and rural
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states. a bank in wichita lent on wheat. the price of wheat plummets, banks in wichita go down. 5,000 small banks fail and there's a cry across the country for the government to insure deposits so this won't happen again. everybody in the country who had more than a high school education thinks deposit insurance is the stupidist idea ever, president hoover, carter glass, the head of the federal reserve board, everybody thinks it's awful because you'll be making the good banks that are run well pay premiums to shore up badly run banks. so everybody says it's just awful. and i had one quote, i was looking at my book the other day which i really liked.
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i'm not going to find it, actually. oh, here. just before the inauguration, roosevelt comes in -- glass has to -- excuse me. glass has to put deposit insurance in his bill to get the reforms he wants on restricting bank lending and reserve bank lending for speculation. he knows he has to have deposit insurance. he hates the idea but he puts it in. and roosevelt is coming in, just about to be inaugurated and he has to decide what to do. and he said, it won't work, jack, the weak banks will pull down the strong and vice president garner says to fdr, you'll have to come to a deposit guarantee eventually, captain. everybody knows deposit insurance is going to be part of it. that's the second major part of the act, deposit insurance. the third is what we know the
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act for today, though it's not the dbig deal then. in the start of the 20th century, the big banks in new york city and chicago, largely city bank in new york, want to go out of the banking business, want to expand from the regular banks business of making loans to underwriting and dealing in securities. but their lawyers read the national banking act of 1864 and say it's illegal for you to do that. the national banking act does not allow national banks to deal in securities. they come up with a scheme. they create separate companies called security affiliates and they're tied to the bank in two ways. they have the same officers and directors as the bank and second, you get a stock certificate that shows you own 50 shares of city bank and 50 shares of their affiliate. you have 50 shares for city bank, you get a letter from them, you own both the bank shares and of the affiliate. it becomes a huge thing in the
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'20s. all of the big banks have them. and banks can only do banking business in one state, their home state, but there's no geographic limit on their securities affiliate. in 1929, city bank's basically doing business in new york. it's affiliate is doing business in all 48 states. it's the biggest securities firm in the country. it's become the biggest security firms and they engage in a lot of dubious practices. an issue comes up as glass is working on his bill, he did his limits on lending for speculation. he got stuck with deposit insurance. what should he do about securities affiliates. glass's first bill provided they were to be regulated, national bank affiliates were to be regulated by the control of currency and state banks that were a member of the federal serve system, they would be regulated by the fed. his second bill introduced a
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year later takes a different approach and outlaws securities affiliates. bans banks from being affiliated with the securities firm. and i did a lot of research and i was trying to find out what drove glass to make this change. one writer who was fdr's advisers said glass always wanted to do that. if he made a change, why did he change? i did not find a clear reason. the same year that glass was given the job of creating the federal reserve system, another committee of congress, called for certain financial reforms and one reform they called for was banning securities affiliates. there was precedent in the democratic party not to allow securities affiliates. second, glass's first approach was regulation. remember in the 1920s, he had gone to the fed, gone to the
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regulators and said this awful thing is going on, all of this money is being poured into speculation. glass was not exactly a great believer in the efficacy of regulation, i think. third, when the fed testified before the subcommittee and he said what should we do about securities affiliates, the fed gave the following kind of answer. if we could do it all over again, we wouldn't have them. but it's very hard to unscramble the eggs. if you want to get rid of them, here's some language you could use if you want to. that was not a ringing endorsement of a regulator. then as glass is probably teetering as to what to do, two related events happen that force him to go for reparation, abolishment. one is a major bank in new york, bank of united states, fails. it's not a downtown wall street bank. it's a bank for immigrants. it has the misleading name bank
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of united states. a lot of immigrants put their money in thinking it was part of the government, it fails and it has 59 affiliates. now the headlines in new york city are full of bank of new york with affiliates failing leaving 200,000 depositors bankrupt and the words security affiliate has a bad sound. second, that leads the banking commissioner of new york, joseph roderick, to introduce legislation in the new york legislature to ban state -- new york state chattered banks from having affiliates. they're proposing to get rid of affiliates and glass follows suit. i think these different elements, glass's dealings with regulators in the '20s, the failure of the bank of the
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united states and the new legislature caused glass to move to separate the -- to require banks to get rid of their securities affiliates. that's what we remember it for today but it had other provisions. glass gets his bill done and remember back in 1912 he presented president wilson -- 1913, he presented president wilson with a draft of the federal reserve act. glass goes to franklin roosevelt, and it has limits on deposit insurance, banning bank affiliates. rooseve roosevelt hesitates because he thinks deposit insurance is a terrible idea. but eventually, events cause roosevelt to support the act. so that is the second major accomplishment of glass and, again, it reflects his belief, i think, that fragmentation is a
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better way to address things than regulation. because the act, instead of providing for the regulation of bank securities provides for their abolition. the third act moves us away from banking. the third act in which glass played a major role to securities. when the new deal comes in, on its list of reforms, in 1933, in the first 100 days, the same period when the act was signed by roosevelt, they enact the securities act of 1933 which says that a new issue of securities like lyft or uber, have to provide full and fair disclosure to perspective investors. that passes with not much controversy. wall street doesn't like it, but it has to swallow it and the regulator of the new dealers pick to administer the 1933 act is the federal trade commission. that had been an agency created
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in the wilson administration to deal with business practices generally. it was full of liberals who hung out there in the '20s hoping democrats would come back into a power. it's a large agency full of liberals and it gets the 1933 act. 1934, the roosevelt administration, the new dealers want to take up the second part of security regulation, that's regulating stockbrokers and the new york stock exchange. it was a very powerful institution. i don't know if we have anything comparable today. it was powerful economically, politically, socially. and there are a lot of fighting about what should that regulation look like, but it's also a fight who should the regulator be. the new dealers say, we want the federal trade commission. it's already doing the 33 act. let it do this act and they say, no, we want a new specialized
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securities agency to regulate us and stockbrokers because we think we need real expertise. and so the new deal bill is put in and it provides that the 34 act regulating the change of brokers is to be regulated by the federal trade commission and how much you can borrow will be given to the federal reserve board. glass goes crazy for two reasons, he does not want the fed having anything to do with the stock market. he does not want the fed to have margin authority. and he does not want the ftc, this big agency, to have power, he wants a specialized agency with securities knowledge to regulate and do margin. roosevelt won't back down and this is 1934, the height of roosevelt's power and there's a fight in the senate banking committee between roosevelt and
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the new dealers on the one side and glass on the other. by a 10-8 vote, glass wins. they vote against roosevelt to create a new agency, the securities and exchange commission, to regulate securities activities and margin. later on margin gets dropped. it goes back to the fed. but in this kind of unexpected vote, we, again, see glass' fragmentation approach. rather than give new authority to the federal trade commission, let's fragment government authority and have a specialized agency, the securities and exchange commission. those are the three acts i want to talk about. the federal reserve act of 1913, the act of 1933, and the securities exchange act of 1934 creating the scc. and they all reflect glass' approach. another thing about these laws, they've all been amended over time. they're pretty old. they've all been amended but
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they're largely in shape today as they were and still form the foundation of the american financial system. the federal reserve act was amended in 1935 to increase the power of the federal reserve board and decrease the power of the regional reserve banks but it's basically the same system that glass proposed, a federal, not a national banking system. unique in the world, it's 90% of what glass first proposed back in 1913. second, the securities exchange act of 1934 creating the scc. every year, every time there's a new election, new president comes in with a new administration, they always have a book of reforms and one of the reforms is to get rid of the scc. there are too many agencies. we have 13 agencies regulating finance. they ought to be rolled into one superagency or combined or the scc should be rolled in with the commodity future trading commission, it's never happened.
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there have been dozens of calls for this, but the scc today is still in independent agency that glass envisioned in 1934. the act, we know what happened, they got rid of the provisions banning banks affiliates. today banks through affiliates engage in all types of securities activities. but the other provisions of the glass act, deposit insurance, limits on bank lending for speculation, prohibitions on federal reserve banks lending for speculation are there today. so the regulatory framework we have is 2080% to 90% of what gls envisioned. since the second world war, we've moved away from the fragmentation approach. we've imposed more and more and more regulation on the financial
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system. when glass started in congress, we only had one federal regulator, the controller of the currency. i think today there are 13. the last act we had was the -- dodd/frank, 2010. it shows you the regulatory approach. this one act, 848 pages. it directs regulators to adopt 243 new rules and to undertake 67 major studies and prepare 22 reports. this is the antiglass approach on steroids and yet when you see people in the financial system and regulators, they all say it's not going to work. we're going to have another financial crisis and probably dodd/frank will not prevent it and will not help soften it. i could give you a list of
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quotes from people, here is the inspector general from the treasury said, quote, we had a system that was broken and the fundamentals within the system hasn't changed. the question is not if the u.s. faces another financial disaster, it's when. so we have a system of more regulation but people are dubious if it's going to work. for that reason, a number of people, john mccain, bernie sanders, elizabeth warren have introduced legislation either to restore the prohibitions or to increase them by saying not only are we going to separate banks from securities firms, but also asset managers. other people have introduced legislation limiting the size of banks like no u.s. bank can have more than 3% of u.s. deposits. these things have gone dormant now, but i will bet a huge amount of money, if we have any kind of financial crisis in the next year, before the election, let's say, these will come out
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of the medicine cabinet and we'll hear again, we ought to restore glass, meaning these prohibitions. the last thing i want to say is a little bit off base. but that's the current events about the federal reserve board. president trump has called for firing, says he wants to fire chairman powell because he doesn't like the fed's policy on interest rates and there's a legal dispute whether he has the power or not. what if glass were to come back today? what would he think about a president who threatens to fire the chairman of the federal reserve board? glass was big on fed independence. and i'll tell you how it comes up. when the federal reserve was created in 1913, it was to have five governors appointed by the president and the secretary of treasury and the controller of the currency. 1935 these two government officials are removed and glass
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wanted them removed. he only wanted people appointed by the president and approved by the senate. he did not want administration officials. so glass i think would have opposed to letting the president fire the president of the federal chair board and how would glass personally act? glass was shorter than i am, weighed about half of what i weighed. he was very feisty. in 1933, he got in a fight off the center floor with senator long. he's about twice his size. long, i think was 37 years old. glass was 75. and glass within the sight of other senators, threw a punch at long. if glass were to run into trump today and were to talk about firing jerome powell, trump might get a black eye. with that, i'll leave you.
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i'll be happy to take your questions. thanks. [ applause ] >> yes, sir? >> what happens during the new deal in relationship to fdr as fdr decides he's going to take the country off the gold standard? >> glass went crazy. he thought it was all illegal. he opposed it all. he opposed almost everything roosevelt did. and they were at odds constantly. there was a short honeymoon period. they liked each other personally, i think. and they each were afraid of each other, i think. because each of them had a power base that nobody could overcome. roosevelt was very popular in
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virginia. he -- he carried the state four times. glass and harry berg controlled virginia. glass had a lifetime job in the senate, so glass would oppose a lot of what roosevelt did but they never went to the mat on it. he kept a lot of his hate of the policies to himself and so they had this relationship -- a lot of people have written about this. my book talks about different theories. my theory is, they were both good politicians and they admired that. they mighted hated each other's policies but they admired each other and kept their distance from each other. yes? >> did glass have any participation in the famous jeckle island meeting. and how you -- you described a little bit about how that just died because they took too long, the aldridge plan, which was
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what came out of the meeting. but how did this guy, which was kind of early in his political career at that point get the political mojo to kind of go to wilson and develop this whole alternative plan -- >> both very good questions. the first question is easy to answer. jeckle island, when aldridge was starting to develop -- aldridge was taking his time. and i think some of the bankers in new york got impatient because he was playing with theories. they said, let's get together, we'll have a secret conclave, we'll go duck hunting on this island off georgia, south carolina, wherever it is, and we'll go down there for a weekend and we'll draft something and that's what happened. that's where the aldridge plan kind of got finalized. nothing to do with glass. glass comes out of nowhere and i think as i tried to say, i don't think anybody knew he had this mojo. but they had nobody else. the party had not been in power
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long. and glass had just studied these things. so i think he just saw the opportunity and took it or they give it to him. they could sense -- he develops the plan in the house banking committee and then presents it to wilson. but there was nobody else around -- i think there was an absence of any other democratic banking guru. that's my own -- it's a very good question. back there? >> i'm very curious, what was the formula that they came up with in the virginia constitution to keep blacks from voting? >> it was a poll tax and a l literacy test. you had to pay a dollar a year for three years so you could vote the fourth year on the same day. not only do you need the money, but you had to do it on a certain day and the
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understanding clause is they could bring in citizens and you could not get the right to vote unless you could answer the examiner's -- what does the second amendment say? how does impeachment work? they would ask questions. it was a combination of poll tax and the understanding clause. that was what glass put together. done in other southern states, but he was a leader if one can use that word, of this -- of that. yes, ma'am? >> wonderful presentation. you describe glass is a self-educated. i suppose he had a tremendous patriotic type of philosophy. so i think way back to constitution it's on one piece of paper. and people had some integrity to follow to do something right. but now, i'm thinking that they
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had to have so many pages. usually the people don't understand that and they don't even read it. now we have interest rate, it's a variation from the markets. so somehow it's wrong and financial institution, whoever appointed to be official there is influenced by some kind of corruptive system, in a sense, so clearly. >> what is your question? >> my question is, how the system changed to -- the system so corruptive and nobody can really change it? >> today. i don't know if that -- that's out of my pay grade. but i think if you ask those people, wilson and glass and brandeis in 1913, they would say
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the system is pretty corrupt. that's what drove the wilson program, the new freedom and that -- and the glass act was part of it. tariff reduction was part of it. there was a lot of stuff -- i think they thought they were dealing with a corrupt system. it was run by wall street. the banks -- the central banks in every other country were run by the financiers. but i think they would have the same optimism and pessimism. >> nice job. >> thank you. >> one question on the regulator side and one on maybe the antiregulation. were there origins in glass's mind or in his activities for what today we would call risk-based capital and normal ratio knows for capital for banks. and at some point in the earlier years, did the idea of going offshore with the financial
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institution to stay beyond the waters of u.s. banking regulation, did that have its origins in this period of -- >> i don't know the answer at ratios at all and i'm unaware of any talk about going offshore. i thought it was complete baloney, completely made up. it was a false -- people who wanted to make -- people who oppose regulation would just say the next dropper regulation, they would give a list of horrors. never happened. i don't think -- no, i didn't hear any of that. they said -- they did say the glass sh grass will grow on the streets of wall street. but the offshore thing, i never heard of. yes, sir? >> around that time, the federal credit union act was passed. fha was created and fannie mae
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was created around that time -- >> around what time? >> the 1930s. >> yeah. >> would that have gone through the house banking committee and would carter have had -- >> glass was a senator. >> that's right. >> and -- yeah, he probably -- my guess is he opposed it. my guess is he opposed -- believe it or not, somebody has done a study of the new deal laws. he opposed 80% of them. he probably opposed fha -- certainly if anything, a social bent, to make the world better for people, glass probably opposed it. he was honest. the best quote i had somebody ask how did he react to the gold standard. when roosevelt first came in, the banks were failing all over the country. and roosevelt ordered all the
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banks in the united states to be closed. and glass said -- wrote to a friend or said to a friend, the president of the united states has no more right to close every bank in the united states than my stable boy. glass was always -- he played country and that was -- and a little racial tinge there. i bet he opposed most other things. [ inaudible question ] >> i don't know. yeah. >> i was confused in terms of why he opposed -- well, wall street was doing before the crash, was he against speculation in general -- >> no, no. what he said -- he wrote a "new york times" editorial, actually, or letter to the editor. if i could find the page. he said i'm not -- i don't care about speculation. but it's using the federal reserve system for reasons i never intended. that's what he wrote. he was proud -- the federal
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reserve was his baby and he created it with certain things in mind. largely to get money to local communities, you know, to local merchants and bankers is not to be used to go to wall street. i don't think speculation bothered him as much as the system was being used for purposes he had not intended. sir? >> my understanding of it is, even though it creates a new governmental agency, it's giving a lot of responsibility over the financial system to the financial players themselves, places a lot of faith in the new york stock exchange as a self-regulating entity, puts a lot of faith in brokers to work in -- to fulfill the disclosure. you have these other models from the states in the early 20th century that were -- what kind of securities get offered. i'm curious where glass fell on that idea -- >> that was -- >> a lot of self-regulation in the game there.
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>> i think -- i never looked into it. but my recollection is, they weren't thinking about that. the new york stock exchange, number one, did not want anybody. if you asked alan dulles, do you want an act to regulate disclosure securities, no. do you want an act to regulate the conduct of the new york stock exchange? we don't need it. i don't think they were thinking about whether it would have heavy direct regulation or delegate to the regulated. i've never seen anything on that. i think a lot of that unfolded over time. i don't remember much talk about self-regulation at that point. yes? >> thanks for taking a second question. did glass participate much in the post world war i deliberations among all the great powers? with regard to the whole german
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reparations -- >> not that i'm aware of, no. >> he didn't -- >> i've never seen any reference to that. he did -- he was a strong supporter of wilson and the treaty of versailles and u.s. entry into the league. in fact, probably what drove glass most nuts, if i had to bet, they alleged that glass opposed -- that glass was an isolationist or whatever the world, complete country bumpkin. he loved wilson. he liked wilson so much, if wilson told glass to cut off his ears, he would have done it. he was in love with wilson. but i'm unaware of any dealings like that. may have been. yes, sir? >> i'm intrigued that both harry bird senior and carter glass were newspaper publishers,
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apparently. is there more to be said about their relationship? >> i know they were buddies and would write back and forth to each other. but i'm unaware of any business ties. but i never looked at bird's papers. i have not seen that in glass' papers. anything else? yes, sir. >> how does it make you feel about the recent banking compromise that was passed. >> where? >> the banking reform -- >> i don't know what it is. >> it was just passed, oh, last congress. okay. >> two years ago. made some minor modifications to the dodd/frank stuff. >> okay. >> to ease up on a few less controversial areas. >> you can usually the bet with
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default with glass is he would oppose it. i think it's very hard to name -- except for the acts he authored, he opposed social security, he opposed the wagner act, he opposed the nra, pretty consistent. he was for tva, oddly enough. but he generally -- he had made it from poverty and -- he thought the world was fine. anything else? thank you very much for listening. thank you. [ applause ] weeknights this month, we're featuring american history tv programs as a preview of what's available every weekend on c-span3.
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tonight the cities tour takes you across the united states and through time as we explore our music history. some of the stops include the rimen auditorium in nashville. watch tonight beginning at 8:00 eastern. enjoy american history tv this week and every weekend on c-span3. david bryce atchison was a two-term u.s. senator from missouri. he was placed third in the presidential line of succession. some contend it elevated him to the presidency for 24 hours in march 1849. next, chris taylor, discusses
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mr mr. atchison's life and if he should be recognized as the nation's 12th president. chris taylor passed away in 2019. >> thank you. that was a grand introduction and if you want the major accomplishment of david rice atchison, thank you, it's been a lovely evening. [ laughter ] >> needless to say, his administration is a little less impressive than maybe truman -- well, anyone else who was ever president. however, david rice atchison is someone you should know about. he was a significant player in the days leading up to the civil war and the term what we call bleeding kansas. he was one of the people who really began the push to


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