(See front cover)
Shortly after the Civil War an undersized, red-headed youngster, son of a local newspaper editor and Confederate veteran, used to be known around Lynchburg, Va. as "Pluck" because, with eyes blacked and nose bloody, he had a dogged way of fighting on & on against awful odds. Last week the Senate paid handsome tribute to "Pluck," now a small hawk-nosed Senator of 75. By a vote of 54-to-9 it passed his bill to reform the national banking system and tighten up loose screws in the Federal Reserve machine.
For two years Senator Carter ("Pluck") Glass of Virginia worked to perfect his measure as a companion-piece to the Federal Reserve Act which he pushed through the House of Representatives 20 years ago. He had to battle a bankers' lobby dead set against further Federal restrictions. He had to overcome the Senate's colossal inertia to plow into a difficult and abstruse subject. He had to beat down a small but dogged opposition which filibustered against his bill for the better part of the three weeks it was before the Senate. He had to keep his temper and his tongue when abused by windy petti-foggers for whose intelligence he had only scorn and contempt. A man of smaller calibre might have given up the struggle— but not "Pluck" Glass. For his reward he had a bill in which he boasted "not an 'i' had been dotted nor 't' crossed by its opponents" without his consent.
Half a Mouth. When Virginia took him out of its State Senate and sent him to the House in 1902, Carter Glass, a small-town editor like his father, was assigned to the Banking & Currency Committee. Of finance he knew nothing but was bent on learning all. Ten years later he emerged as the committee's chairman ready to make his maiden speech before the House. What he had to say on the Federal Reserve bill (then called the Owen-Glass measure) filled 14 newspaper columns. Thereafter he was silent for 30 months. This year in the Senate, where he is now recognized as the ablest legislator on banking matters, he talked for less than five newspaper columns. His words drawled out of the right corner of his severe mouth, his lips curling up into an expression of chronic ill humor. (Woodrow Wilson once remarked: "Think what Glass would say if he ever used both sides of his mouth!")
Reforms. Senator Glass's bill had its roots in the collapse of the Coolidge bull market. As he saw it, Federal Reserve credit had been perverted from legitimate commercial enterprises to the wildest stock speculation in history. As sponsor for the Federal Reserve, he felt it his legislative duty to see that such a thing could not happen again. The bill that he wrote and the Senate passed provided that:
1) Federal Reserve member banks may not use their spare funds to finance stock market operations.
2) Member banks must cut themselves loose from their security affiliates in five years.
3) A special $800,000,000 corporation, to which the Treasury will subscribe $125,000,000 and the Federal Reserve and member banks the balance, will help liquidate closed banks.
4) The Secretary of the Treasury will be removed from the Federal Reserve Board.
5) National banks, on the basis of capitalization and population, may establish branches in States permitting branch banking.*