Financial History Issue 129 (Spring 2019) | Page 30

The Legacy of By Matthew P. Fink CARTER GLASS “Carter Glass is the single most important lawmaker in the history of American finance.” — Richard E. Farley Carter Glass was not a theorist. He did not spell out his economic and political beliefs in books and articles. Glass was a practical politician who served as a con- gressman, Secretary of the Treasury and senator for over 43 years. Like other men of action, Glass was not entirely consis- tent. He had the nation’s first securities disclosure bill prepared in 1919 when he was Secretary of the Treasury. Later as a senator, he showed no interest in this topic when Congress considered the Secu- rities Act of 1933. Glass drafted the Glass- Steagall Act of 1933 to prohibit banks and their affiliates from underwriting and distributing securities. Just two years later, he proposed legislation that would have permitted banks to reenter major aspects of the securities business. Despite these and other inconsisten- cies, Glass’s overall record—his speeches, floor statements in the House and Senate, questions at congressional hearings, private correspondence, and above all, his actions —demonstrate that Glass held consistent core beliefs. First, Glass generally opposed an activist federal government. This was evidenced by his fierce hostility to the vast majority of New Deal laws. Second, Glass feared powerful financial interests. Therefore, he made exceptions to his usual opposition to government involvement in the case of laws designed to curb concen- trated financial power. Third, Glass favored a legislative approach that sought to curb financial power by fragmenting that power rather than by seeking to regulate it. Thus, he drafted the Federal Reserve Act of 1913 to create a number of regional reserve banks instead of a singular central bank. Later he drafted the Glass-Steagall Act of 1933 to separate commercial and investment banking activities, rather than authorizing the Federal Reserve Board and the Comptroller of the Currency to regu- late bank security affiliates. At times, Glass also pursued a fragmentation approach with respect to government. Thus, in 1934, he succeeded in lodging jurisdiction over securities activities in a new specialized Carter Glass, during his tenure as senator from Virginia, May 5, 1920. 28    FINANCIAL HISTORY  |  Spring 2019  | www.MoAF.org