Born to brawl
Perhaps the most telling comment about Carter Glass came from President
Franklin Roosevelt, who called Glass an "Unreconstructed Rebel." Roosevelt
meant exactly what the capital "R" on Rebel implies. As the Senate's last
surviving member born in the antebellum South, Glass unapologetically
fought to retain a society in which property-owning, white males sat at
the top of the pyramid. In that regard, he was a man of his times.
Carter Glass was born just as the year 1858 began, into a newspaper
family that did not back away from a fight. Robert Henry Glass, Carter's
father, owned the Lynchburg Daily Republican, the dominant
Democratic newspaper in southwestern Virginia. In the summer of 1860,
while Robert was away on business, his associate editor, George Hardwicke,
killed a rival newspaperman who accused Glass of using his position as
postmaster of Lynchburg to prevent the delivery of his competitor's papers.
The elder Glass himself almost got into a duel, but his wife swore out
warrants on both parties, and the matter was settled with canes rather
than pistols. These lessons were not lost on Carter Glass, a scrapper
in his youth who, as the eventual publisher of his own newspaper, almost
came to a duel with a cross-town rival.
During Reconstruction, there were few opportunities for
the younger Glass to receive much formal education. At the age of 13,
he was taken out of school and apprenticed as a printer with his father.
From that point on, he learned on his own, reading Plato, Edmund Burke
and Shakespeare, and his love of such intellectual pursuits never waned.
Later, when he owned his own papers, he published articles about the true
identity of Shakespeare, the meaning of the biblical stories as history
and other such topics.
Carter worked six years for his father, then moved with him to Petersburg,
Va., to work on The Petersburg News. When the reporting job
young Glass wanted did not materialize, he took a job as a clerk in the
auditor's office of the Atlantic, Mississippi and Ohio Railroad back in
Lynchburg. Robert accepted one of his son's political editorials, and
soon after, 22-year-old Carter was offered a job as reporter on the Lynchburg
News. Within a few years, he became the paper's editor and also
served as clerk for the city of Lynchburg. With what looked to be a bright
future, at the age of 28, Glass married his landlord's daughter, a school
teacher from Lynchburg, and they eventually had four children.
In 1888, with the help of some friends, he bought the Lynchburg
News, and two years later, he purchased the Daily Republican,
once owned by his father. In the meantime, the elder Glass returned to
Lynchburg and took over the editorship of The Advance, becoming
Carter's rival. During a family feud, Robert stormed over to his son's
offices and asked him where he had come up with the nonsense printed in
the News. Carter pointed to a clipping his father had written
earlier and said, "In my boyish pride of my father, I used to keep a scrapbook."
Eventually, he bought the paper his father was editing and became the
only publisher in town. Well respected both inside and outside his community,
he used his influence to champion politicians who ran against what he
felt were Democratic politicians promoting bad fiscal policy. Two important
events occurred in 1896: his father died, and Carter went as a delegate
to the Democratic National Convention. There he heard William Jennings
Bryan speak for free silver in his famous speech: "Thou shalt not press
down upon the brow of labor this crown of thorns. Thou shalt not crucify
mankind upon a cross of gold!" Glass would later repudiate Bryan's philosophy,
but the adventure hooked him on politics.
As a politician, he was never in doubt
In 1899, Glass was elected to the Virginia Senate. Two years later, as
a delegate to the State Constitutional Convention, Glass became instrumental
in pushing through the convention a proposal to proclaim a new state constitution
outright without submitting it to anyone, thus disenfranchising those
who had gained the right to vote under the 14th and 15th amendments. Almost
four decades later, when President Franklin Roosevelt wanted to abolish
poll taxes throughout the South, Glass defended the plank he himself had
put into the Virginia Constitution and stated that "the President displays
a very superficial knowledge of the subject."
Even as he worked to disenfranchise certain segments of society, he had
a soft spot in his heart for individual blacks. In the midst of the fight
over the Federal Reserve Bill, Glass made a special trip home to Lynchburg
to appear at the manslaughter trial of his black servant. He took the
witness stand, "swore that William was the best Negro that ever lived
in the United States" and pleaded to keep him from imprisonment. When
William was fined $200, Congressman Glass reached into his pocket, pulled
out a roll of bills, paid the fine, then rushed back to Washington, D.C.
In 1902, at the age of 44, Glass was elected to the U.S. House of Representatives.
To those who did not know him, he appeared sickly and frail. The 5-foot-4-inch
Glass had dropped to 100 pounds and walked around on tiptoes to avoid
jarring his sensitive stomach. This malady was not uncommon for Glass.
Four years earlier, doctors warned him that his irregular eating habits
and intense working habits had almost ruined his digestion, as well as
caused a number of other bothersome ills. "Rest," his doctor ordered;
but it was a futile request.
His colleagues in the House soon learned that this little man was not
to be taken lightly. Within two years, he was appointed to the Committee
on Banking and Currency and threw himself into the study of finance just
as heartily as he had earlier delved into questions about Shakespeare
when he was a newspaper editor.
Shaping a central bank
The Banking Panic of 1907 put the Banking and Currency committee in the
spotlight, and Glass found himself chairman when his friend Woodrow Wilson
was elected president. Initial efforts at resolving the problems raised
by the 1907 panic, though, were met with frustration. Essentially, legislators
were concerned about two issues: a banking system that was prone to panics
(1907's event was not rare), and a currency that was not responsive to
changes in demand. On the makeup of a reserve system to address those
problems, there was disagreement over the control of such an institution:
Should private banks have control over the eventual Federal Reserve System,
or should their input be confined to decentralized banks within the system?
Carter Glasswho favored decentralized powerwas particularly
adamant on this question, and his role in developing the legislation is
an example of how his Jeffersonian ideas of democracy, along with his
tenacious spirit, helped shape one of the country's most important pieces
of financial legislation. After working tirelessly on the subject for
five years, the election of 1912 brought an opening: not only did it usher
Wilson into the White House, but it also gave Glass' party control of
both the House and Senate.
Glass wasted no time. He began drafting legislation with Wilson before
the newly elected president even took office, and by December of the following
year, the Federal Reserve Act was passed and signed into law. Glass was
thrilled: "The thing which had been vainly discussed and intermittently
attempted for 20 years had finally been accomplished!"
Essentially, in constructing the Federal Reserve Act with Wilson, Glass
had repackaged the previous Republican administration's proposal, the
economist Milton Friedman would later write, making it even more conservative.
Instead of a centralized bank under private banker control, Glass, of
course, wanted decentralized banks under private control. (The claim that
the Federal Reserve Act was a modified form of the Aldrich plan was also
made in Glass' day, and it was a notion he detested. In a 1922 speech
before the Senate, Glass called the idea "a total misunderstanding," and
said "no greater misconception was ever projected in this Senate Chamber
...") It was Wilson who suggested an altruistic board of governors appointed
by the executive branch. Even though he may not have entirely liked that
idea, Glass and his sharp tongue helped guarantee the bill's passage.
During the coming European war, Glass supported Wilson and the struggle
for a lasting peace. At the end of 1919, he was named Wilson's Secretary
of the Treasury, the first cabinet officer from Virginia since the elder
Glass' commander, John Floyd, was Secretary of War in Buchanan's administration.
As such, Glass favored rebuilding Europe, including the defeated Germany,
and pushed for American financial assistance. Although as head of the
Treasury, Glass was in charge of enforcing prohibition laws, his greatest
domestic concern had to do with the vast amount of borrowing for stock
market speculation. Glass wanted the banks voluntarily to restrict their
lending for stock purchases and warned about the consequences if nothing
Exactly one year after he took over at the Treasury, the popular Glass
was appointed to the Senate in 1920 to succeed Thomas S. Martin of Virginia,
who died in late 1919. Glass would remain a Virginia senator until his
When Glass' predictions about the economy came true in 1929, he first
went to work defending his original Federal Reserve legislation, then
proceeded in 1931 to write a banking reform bill to provide the Federal
Reserve Board with greater control over speculative credit. Thus began
an important period wherein Glass and the rest of the nation, reeling
from a series of financial panics and rampant bank closures, reconsidered
what type of financial system was best for the country.
Briefly, some of the laws enacted:
- Glass-Steagall Act of 1932: The piece of legislation that keeps Glass'
name in the news today, largely because of its provisions that separated
commercial and investment banking; current reformers hope to mend that
split. The Act also permitted the use of U.S. government securities
as collateral for Federal Reserve notes.
- Banking Act of 1933: Established the Federal Deposit Insurance Corp.set
the insurance level at $2,500 per depositor; placed control of open
market operations under the Federal Reserve.
- Reconstruction Finance Corp. (1933): Permitted Federal Reserve to
issue loans directly to businesses.
- Securities and Exchange Act: Provided for minimum margins on purchases
of securities on credit.
- Banking Act of 1935: Created the Federal Open Market Committee; Federal
Reserve Board becomes the Board of Governors, with terms set at 14 years;
Secretary of the Treasury and Comptroller of the Currency were removed
from the Board.
Glass was not always on the winning side of these new laws, including
in his opposition to federal deposit insurance. As Friedman and Anna Schwartz
tell it in their Monetary History of the United States: "[Glass]
had opposed a similar provision at the time of the passage of the original
Federal Reserve Act. Glass believed that the solution was reform of the
practices of commercial banks and introduced several bills to that end.
None received the support of the administration or of the Reserve System,
and none was passed."
In 1932, the political party he had been a member of for many years began
to head down a path Glass did not care to take. Although he was said to
like Franklin Roosevelt personally, he could not bring himself to trust
anyone who sought public office with Roosevelt's vigor. Glass had also
locked horns with Roosevelt when the latter was assistant secretary of
the Navy and wanted to keep the Coast Guard under the Navy's jurisdiction
after the end of World War I. Glass, as the head of Treasury, insisted
it return to Treasury's control and won the point. Despite his misgivings,
Glass got out of his sickbed to defend Roosevelt against Hoover's attacks.
Roosevelt, in turn, offered Glass the Treasury. In poor health, Glass
turned down the office, but he also knew that he and Roosevelt did not
agree on fundamental economic issues. Glass tried to keep their disagreements
private, but in a very short time, the Roosevelt administration would
give him fits. The New Deal came along and took his mind off everything
else, according to a flattering biography, even his prized Jersey cows
at his home at Montview Farm, Va.
Although in public Glass continued to support the Roosevelt administration,
he openly fought some Roosevelt initiatives and worked tirelessly to fight
against what he considered unconstitutional interference by the federal
government in private affairs. But the fact that the New Deal carried
all but two states in 1936 did not surprise Glass: "It is well nigh impossible
to beat a five billion dollar campaign fund," he quipped.
For the first time in years he did not participate in the construction
of the party platform in 1936, and he spent the next four years working
for a balanced budget and states' rights, usually behind the scenes. In
1937, however, he went on the radio to attack the White House's attempt
to pack the Supreme Court. Glass won the battle. In 1940, as he had done
four years earlier, he fought against the nomination of Roosevelt, but
gave his support when the Democrat was nominated for a third term.
Having been a widower for the previous three years, Glass remarried
in 1940 at the age of 82. Although Glass' character had been "carved out
of unblemished granite," according to Harry Byrd, the junior senator from
his home state, the man himself had begun to allow the illnesses which
had plagued him for most of his life to slow him down. For all intents
and purposes, the father of the Federal Reserve System retired from public
life within two years.
Finally, at the age of 88, Glass died of congestive heart failure in
his apartment at the Mayflower Hotel in Washington, D.C. Out of respect
for the senator from Virginia, the Senate suspended business and adjourned
for the day.
"A link with the Old South is broken in the passing of your distinguished
husband," President Truman wrote to the second Mrs. Glass. "To the end
he glorified in the title of 'Unreconstructed Rebel.'"