Into Congress last week overflowed the financial argument between Federal Reserve Board and Wall Street (TIME, Feb. 18). A mingled outburst of oratory, ethics, provincialism and a little economics was the result. The prevailing sentiment was strongly against the speculator. Since, however, the very Senators and Representatives who were most inclined to view Wall Street as the heart of the money octopus also regarded the Federal Reserve System as at least a tentacle of the same monster, the banker was scolded while the broker was flayed.
Senate. The Senate passed a resolution asking the Federal Reserve Board to lay before it such information as might be "helpful" in securing anti-speculative legislation. It was a mildly-worded resolution, perhaps because it was edited by Senator Carter Glass of Virginia, one of the authors of the Federal Reserve Act (1913). Not mild, however, was the accompanying speech by ponderous Senator Heflin of Alabama. Wall Street, he bellowed, was the hotbed and breeding place of the worst form of gambling that ever cursed the country. The Louisiana State Lottery slew its hundreds but the New York State gambling exchanges were slaying hundreds of thousands. The gambling monster was destroying U. S. homes, was driving U. S. citizens to poverty, to insanity. There must be a stop put to this evil, etc. etc.
More specific was Senator Smith Wildman Brookhart of Iowa, who was born in a log cabin remote from the money-changers. Why, argued Senator Brookhart, quibble about such a detail as prohibiting merely Federal Reserve Banks from making speculative loans to Federal Reserve Bank members? Let us prohibit any loan by any bank to any borrower who might put the loan to speculative purposes. Radical also was the remedy offered by Utah's Senator William H. King, who has ascertained that 85% of speculation is made on margins, and who believes therefore that marginal trading should be abolished. Senator Thaddeus H. Caraway of Arkansas went charging off into the commodity mar kets and proposed to punish trading in cotton and grain futures with fines and imprisonment.
The House considered speculation more calmly, though Pennsylvania's Louis T. McFadden, chairman of the Banking & Currency Committee, announced that at the next session of Congress his committee proposed to go into Federal Reserve discounts, brokers' loans, investment trusts and mergers. Representative Loring Black, a smart sensationalist, attacked the Reserve Board for alleged connivance with Great Britain. He argued that if England needed gold it ought not induce the Federal Reserve to interfere with U. S. prosperity by hampering Wall Street but should sell to the U. S. some of its island possessions off the Atlantic Coast, which possessions are naval bases that threaten U. S. security. Representative Garner, ranking Democrat on the Ways & Means Committee, thought that anti-speculative legislation was a "far-reaching" matter that ought to be "carefully considered."