Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-04-21

which lie within their hands. Some
times they are pictured as monsters
with horns and tails, sometimes as
demi-gods who can do no wrong. But
at closer range they impress casual
observed as s.Ncere, earnest American
citizens struggling with task that may
be too big for any group OF human
beings to handle.
+ There are no "lame ducks" among
the men who manage and control the
Federal reserve system, and examina-
ton of its personnel shows an unusual
freedom from political influence as
compared with other institutions Gre
ated by Federal legislation.
Among the members of the Federal
Reserve Board there is only ore former
Representative. This Is Vice Gov. Ed
mund Platt. He is in no sense lame
duck" as he was chairman OF the
powerful House committee OIL banking
and currency when he resigned to ac-
Reserve Board. Nor was his appoint
ment matter of political preferment
He was a stanch Republican and Wood
row Wilson was Democrat.
No lame ducks" are to be found
among the governors of the IL Federal
Reserve Banks or the chairmen OF their
boards of directors. Only two OF the
governors have ever held political Office.
George w. Norris, governor o. the
Philadelphia bank, was director Of the
department Of wharves, docks and fer
rieS during the reform" administration
of that city under Mayor Blankenburg.
Prior to that time he was successful
banker. w. j. Bailey, governor OF the
Kansas City Bank, was elected Governor
of Kansas back in 1908, but at the time
"a ~ AS~~k, to 1fe
ton he was banker with more than 70
years Of practical experience.
Such freedom from politics Is nat
urally to be expected among the gov
errors Of the reserve banks. They are
chosen by the directors of the several
reserve banks, all of whom are hard
headed bankers and business men. The
fact that politics does not play cen
trolling part in their selection would
seem to be indicated also by the fact
that governors of the Boston and Phila-
delphia banks are Democrats, while the
governor of Dallas is Republican.
Appointment Of Agents.
When we turn to the Federal reserve
agents, who are appointed directly by
the Federal Reserve Board in Wash
ington, it is more reasonable to lock
for evidences of political influence.
Their duties are less technical than
those of the governors, but their power
and influence as chairmen Of the boards
of directors Is great The salaries, rang
ing from SIG, 900 to $50, 900 year, make
these positions ''plums" which cause
any politicians mouth to water.
And yet among the IL Federal re-
serve agents, there is only one who has
ever held political Office. This is Rolla
Wells, chairman of the board &c di-
rectors of the St. Louis bank. He was
Mayor of st. Louis from 1901 to 1909,
and treasurer Of the Democratic ma
tional committee during Wilson's first
administration. His selection as Fed
eral Reserve agent and chairman of
the board did not come, however, until
the Coolidge administration, when
majority of the members Of the Fed
eral Reserve Board were Republicans
Known as one of the sblest business
men of that district his appointment
was in no sense determined by politics.
This apparent immunity Of the Fed
eral Reserve System from politics Is
not q matter of luck or accident It is
due in part to the fact that number
of leaders of both parties have from
the beginning regarded this great finan-
cial system as an institution which
should be kept clear of the evils Of
patronage and have discouraged all
attempts to use 1t as place for de-
serving Democrats or needy Republic
ans. Even more, it is the result of the
steady resistance by the Federal Re-
serve Board, itself against all attempts
to drag it into politics.
During the campaign Of 1920 James
M. Cox, the Democratic candidate, is
said to have wired w. p. G. Harding,
an Alabama Democrat, then governor
of the Federal Reserve Board, that I'M
less larger credits were granted to
farmers, there was danger of losing the
election. Gov. Harding wired back:
1.-THE Federal Reserve Board Is not q
candidate for President"
1t is no secret that some attempts to
control appointments for political pur-
poses were made when the reserve Sys-.
tenn was created, but the real assault
upon the integrity of the system did
not come until the Harding admins
tration. Great publicity was then being
given to the relatively large salaries
paid by some of the banks and to the
great profits which they had made dur
ing the period of postwar imitation.
It was natural that some of the party
workers should look with greedy eyes
at such rich spoils Of Office.
On one occasion President Harding
himself wrote a letter inquiring about
appointments to the class G director
ship of one of the large reserve banks.
The official reply did not directly an
swer the question, but stated gently
but firmly the requirements prescribed
by law, with the clear intination that
the board would not countenance politi-
Cal appointments. One of the members
Of the board resigned during this pc
Rod as q protest against political pres
sure and the attempts thereafter prac-
tically ceased.
Attempts at Control.
Senators and Representatives have
likewise tried from time to time to break
through and control q share of this
patronage, but without apparent sue
cess. To the credit of both houses, it
is said that such efforts have been In
frequent and have come usually from
men new to Washington, who did not
| understand that the Federal Reserve
System was not a happy hunting
| ground Tor politicians.
| At bottom, however, this immunity
from political control and the evils Of
| political patronage lies in the fact that
| the Federal reserve banks are not
Government banks. They are bankers
banks. The Federal Government does
not own q dollar of their stock, and
exercises q large measure of control
! only because Of the great public interest
! with which the system is charged. Any
efforts to convert it into q political
/! pie counter" would therefore be resisted
not only by influential members Of Con-
gress but also by the entire. financial
Icommunity.
half the worlds gold They have direct
control Of the credit machinery Of the
Nation. They fix the discount rates.
which In the end determine the interest
that is to be paid by every merchant,
manufacturer and farmer in the United
States. Last year they discounted bills
amounting to more than three times the
i - .s1ae aIeeV.