The Occupy Wall Street demonstrations that began in September 2011 do not put forward any single set of grievances or demands. The protests reflect many points of views and widely different agendas. To the extent that a common concern may be identified, it is probably the gap between "the 1%"—wealthy traders and bankers at the top of the financial services sector—and "the 99%"—everyone else, including the demonstrators. According to the protestors, the 1% are thought to have too much wealth and power and to have interests in conflict with the economic well-being of the rest of the country. The 1% vs. 99% critique, while it may mean different things to different people, suggests a set of propositions about the role of financial services in the economy, including the following: that the financial industry is now an excessive consumer of human and financial capital that could be more efficiently employed in the production of real goods and services; that exorbitant compensation of Wall Street traders (1) exacerbates income inequality and (2) encourages excessive risk-taking, which ultimately penalizes taxpayers, who must not only pay for bailouts of failed banks, but also suffer higher unemployment and slower economic growth during and after recessions that are worsened by financial crises; that complex new financial instruments and short-term speculative trading strategies have made a few individuals very wealthy, but have made the financial system, upon which all consumers and businesses depend, less stable; and that the industry has grown beyond its natural function of intermediation, or channeling savings from households to productive business investment, and has become a kind of self-enclosed casino. This root-and-branch criticism of the financial sector, while not unrepresented in current and past research, is outside the mainstream of economics. One strain of American political thought, on the other hand, has included sweeping attacks on high finance, which has been recurrently portrayed as morally corrupt, as well as detrimental to productive enterprise, labor, and democracy. This report presents excerpts of political statements about the costs and benefits of finance and examples of recent economic research that points to aspects of financial activity that may not be beneficial to the real economy. The report does not attempt a comprehensive survey of the relevant political or economic literature, but provides a reminder of the historical debates that have shaped congressional oversight of financial institutions and markets. The major American political parties have often been divided on issues of economic and financial regulation, but they have shared "a belief in the rights of property, the philosophy of economic individualism, the value of competition, [and] they have accepted the economic virtues of capitalist culture as necessary qualities of man." Within that broad consensus, however, there has been space for sharp challenges to various forms of financial activity, often in the form of attacks on special interests. The original clash of economic views was between Thomas Jefferson's agrarian vision and Alexander Hamilton's projects to modernize government and private finance. In conversation with President Washington, Jefferson predicted that the introduction of national banking and paper money would have the effect of "withdrawing our citizens from the pursuits of commerce, manufactures, buildings, and other branches of useful industry, to occupy themselves and their capitals in a species of gambling, destructive of morality, and ... [introducing] poison into the government itself." Hamilton argued the reverse: "by contributing to enlarge the mass of industrious and commercial enterprise, banks become nurseries of national wealth; a consequence as satisfactorily verified by experience, as it is clearly deducible in theory." He acknowledged the criticism that banking brought "temptations to overtrading," but argued that this was "an occasional ill, incident to a greater good." One reason Andrew Jackson vetoed the rechartering of the Bank of the United States in 1832 was his belief that the bank represented an unjust grant of monopoly powers that would enable the few to oppress the many: In the full enjoyment of the gifts of Heaven and the fruits of superior industry, economy, and virtue, every man is equally entitled to protection by law; but when the laws undertake to add to these natural and just advantages artificial distinctions, to grant titles, gratuities, and exclusive privileges, to make the rich richer and the potent more powerful, the humble members of society—the farmers, mechanics, and laborers—who have neither the time nor the means of securing like favors to themselves, have a right to complain of the injustice of their Government. Jackson's veto was followed by decades of debate over the currency, monetary policy, and bank regulation. Eastern banks were commonly described as rapacious and anti-growth by western interests seeking easy money to underwrite rapid and risky economic development on the frontier. During the Gilded Age of the late 19 th century, the philosophy of Andrew Carnegie's "Gospel of Wealth" was counterbalanced by harsh attacks on financiers like J.P. Morgan, whose control over financial markets and the economy was viewed as anti-democratic, and whose wealth was described as a product of the exploitation of hardworking farmers and businessmen. Perhaps the peak of anti-Wall Street rhetoric was Theodore Roosevelt's phrase "malefactors of great wealth." Roosevelt sought to reduce the power of trusts and monopolies; part of his attack was a moral distinction between finance and enterprise, appearing vividly in this article written while he served on the United States Civil Service Commission in 1895: There is not in the world a more ignoble character than the mere money-getting American, insensible to every duty, regardless of every principle, bent only on amassing a fortune, and putting his fortune only to the basest uses—whether these uses be to speculate in stocks and wreck railroads himself, or to allow his son to lead a life of foolish and expensive idleness and gross debauchery, or to purchase some scoundrel of high social position, foreign or native, for his daughter. Presidents Taft and Wilson continued Roosevelt's trust-busting policies. Wilson took up the idea that rather than facilitate industrial development, high finance could actually hinder it: Such a prohibition [on interlocking control of financial and nonfinancial corporations]will work much more than a mere negative good by correcting the serious evils which have arisen because, for example, the men who have been the directing spirits of the great investment banks have usurped the place which belongs to independent industrial management working in its own behoof. It will bring new men, new energies, a new spirit of initiative, new blood, into the management of our great business enterprises. It will open the field of industrial development and origination to scores of men who have been obliged to serve when their abilities entitled them to direct. It will immensely hearten the young men coming on and will greatly enrich the business activities of the whole country. Representing another strain in American political thought, Presidents Coolidge and Hoover took a much more positive view of Wall Street. Addressing the New York State Chamber of Commerce in 1925, Coolidge was expansive: We are met not only in the greatest American metropolis, but in the greatest center of population and business that the world has ever known. If any one wishes to gauge the power which is represented by the genius of the American spirit, let him contemplate the wonders which have been wrought in this region in the short space of 200 years....The foundation of this enormous development rests upon commerce. New York is an imperial city, but it is not a seat of government. The empire over which it rules is not political, but commercial. Even after financial turmoil began in 1929, Hoover looked to Wall Street as a source of stability: There is no one group of which the public expects so much in assuring stability as the bankers, because in the vortex of these storms many values lose their moorings. Nor can any other group contribute so much in constructive thought and action to solve the problem either today or in the long run. Three most important relationships to these business movements lie in the banker's field. The first is what, for lack of better terms, we call psychology—both that contagious overoptimism which accelerates the inflation of the boom and those depths of fear and pessimism which deepen and prolong the depression. The American banker has come to occupy a unique position in the strategy of stability, for he is the economic adviser of American business. He is the listening post of economic movement. He in large measure makes or tempers its psychology. During the Depression, Franklin Roosevelt took sides against the financial sector, which was widely blamed as a cause of hard times: [W]e have been shocked by many notorious examples of injuries done our citizens by persons or groups who have been living off their neighbors by the use of methods either unethical or criminal... [including] high officials of banks or corporations who have grown rich at the expense of their stockholders or the public, [and] those reckless speculators with their own or other people's money whose operations have injured the values of the farmers' crops and the savings of the poor. He counted "business and financial monopoly, speculation, reckless banking, [and] class antagonism" among the "old enemies of peace." After World War II, financial markets and the economy enjoyed half a century of more-or-less unbroken prosperity, and attacks on Wall Street like the above became rare. With the crisis of 2007-2009, the ensuing recession, and the weak recovery, however, old questions of economic fairness and the social utility of some of the financial sector's output have re-emerged. Congressional oversight of financial markets and institutions normally focuses on particular issues, rather than normative evaluations of the whole industry, but history suggests that questions about the value of certain financial activities to those who do not profit from them directly are not far below the surface. The textbook view is that financial intermediation is crucial to the creation of wealth.