Wall Street And The Government, Washington Domination
( Originally Published Early 1900's )
The Washington domination, which had such a blighting influence on speculation and business interests generally during the greater portion of the last Democratic regime was so potent and peculiar in its nature and results that I think it is entitled to very serious inquiry with regard to its causes. Some of these may be at least surmised, if not demonstrated, by a careful study of our governmental policy during the period of the abnormal conditions which so thoroughly upset the conventional methods of Wall Street. The humiliation of the spectacle was sad, but it did not seem to strike many of the people in that light. The necessities of the case were all they appeared to regard, and they servilely conformed to them. The power was apparently too strong to be opposed, and the authority too autocratic to be disputed. It seemed very like a manifestation of hypnotic influence on a large scale. At one time the government assumed the complexion of a centralizing bureau of financial information with a censorship attachment, and though there was no censorship publicly established, yet it was presumable that the news went through a secret sifting process under the surveillance of a senatorial clique before it was given out for general distribution. If you wished to avoid irreparable mistakes, you were obliged to take your cue, humbly, from the seat of government, while you had to be careful to observe the adage, "Least said, soonest mended." Washington statesmen were at that time more conspicuous in the eyes of the business public, and especially in senatorial circles, than they had ever been before during the history of the Republic. Presumably it may be only a symptom or characteristic of progress; for I believe that, without close intimacy and contact with Wall Street, it is impossible for the government to exhibit a healthy condition in some of its most important concerns. In fact, if it were cut off from Wall Street, emergencies would be liable to arise almost at any time that would place it in a state of helplessness though not of " innocuous desuetude "; for if the government were stranded for want of money, the consequence would be appalling to the nation. It is fairly inferable, and in many instances it has been demonstrated, that government is largely dependent on Wall Street in all financial emergencies, and when the powers at Washington assumed the ascendancy, it seemed to the apprehension of acute financiers and old habitués of the Street that the natural order of things had been reversed, and in fact that "the tail was wagging the dog." It was partly, therefore, through failure of recognizing this dependence of government on the great center of finance and attempting, instead, to exercise a domineering policy through the chicanery of a political clique, that this temporary domination was established. It was eventually a failure, and then the true attitude of the financial power had to be recognized nolens volens. As all roads in the old world were formerly said to lead to Rome, so all financial roads in America must inevitably lead to Wall Street. There is no way but this; and it is within the range of possibility, I may say probability, that at the end of a similar period in the unexplored future, when the Greater New York buildings shall have covered Long Island, Staten Island, the greater part of New Jersey, and extend, perhaps, even unto the Adirondacks, Wall Street will still maintain its prestige as the great loaning and financial center. Yes, more, - New York may then be the financial center of the world; for Macaulay's New Zealander will, perhaps, have arrived in the English metropolis long ere that date, and taken his stand on London Bridge to sketch the ruins of St. Paul's. Owing to the legislative delays in regard to the repeal of the Sherman Silver Law, as well as disappointed expectations regarding an anticipated bond issue that would have brought partial relief if it had been negotiated at an earlier date, people were kept in a highly agitated and nervous condition during the entire summer of 1893. There had been so much weary waiting and worry, and the agony had been so long drawn out, that when the relief came in November, six months too late, it was no relief at all, for the worst had been done. If Mr. Cleveland had dealt with the subject in a more positive manner in his inaugural address, that might have helped to turn the tide of adversity before its power had become disastrous, but an intense aversion to the silver cranks took possession of his mind and prevented him from taking the much wider view of the situation which the emergency required. When the President called the special session of Congress on November 1, 1893, he had no idea of the extent to which his " object lesson " would spread before the end of the year, nor of the devastation that would follow it. I will even venture to assert that if the advice given in a bulletin, which I published about the middle of that August, had been taken by the Administration, the ravages of the then existent panic would have been neither so extensive nor so pernicious as later developments showed. The following is a copy of the bulletin: - "AUGUST 14, 1893. "The object lesson which was an attack against silver, really caused the panic, the incentive being to affect legislation so as to bring about the repeal of the authority of the government to purchase silver. Instead of any attempt being made to stop the panic, it was permitted to make headway to the point of exhaustion, the entire country being absolutely covered by it. Senator Hoar recently said over his signature, that if President Cleveland had declared in his inaugural address that the full power vested in him should be used to keep the gold and silver money of the country of equal value, it would have prevented the panic. I believe that to be true. Or if, at the time Europe commenced to draw our gold away on account of a scare which was founded on the fear that we were going to drift to a silver basis, the President had authorized the sale of only a moderate amount of United States bonds for gold, his action would have been accepted both at home and abroad as an evidence that our government had entered the world's contest for gold. That alone would have saved us from the panic; but the President did neither of these two things, and thus caused an abandonment of all hope of relief from the administration; so the panic has had to continue, as a natural sequence, to the point of exhaustion. The only hope left is that wise legislative action will come from Congress. It is for that reason that the assembling of Congress has been so universally desired. To restore confidence, therefore, is now the task which that august body has in hand. It has a patriotic work to do, and party animosities should not be permitted to crop out in any direction." Notwithstanding the plentiful advice which came not only from Senator Hoar and myself, but also from other quarters, the panic materialized because the Administration did not recognize the important fact in the healing art, that prevention is better than cure. It may be interesting to examine also how far the Administration was in harmony or otherwise with the requirements of the Constitution on that occasion. The third section of the second article of the Constitution of the United States makes the following provision with regard to the powers of the President. It says: - " He shall from time to time give to the Congress information of the state of the Union, and recommend to their consideration such measures as he shall judge necessary and expedient. He may on extraordinary occasions convene both Houses, or either of them, and, in case of a disagreement between them, with respect to the time of adjournment, he may adjourn them to such time as he shall think proper. He shall take care that the laws be faithfully executed; and shall commission all the officers of the United States." It will be observed by a careful reading of this section that it confers immense powers. The Executive is the sole judge of the expediency of the measures which he may think proper to recommend to Congress. It is understood as a matter of courtesy that he will consult the Cabinet on such occasions, though the section does not say so. The powers which it thus confers were widely conceived and considered by the Fathers, and according to Chief Justice Story were most beneficent in their design. Commenting on the section just quoted, that eminent jurist says: “The first part, relative to the President's giving information and recommending measures to Congress, is so consonant with the structure of the executive departments of the colonial and state} governments, with the usages and practice of other free governments, with the general convenience of Congress, and with a due share of responsibility on the part of the Executive, that it may well be presumed to be above all real objection. From the nature and duties of the executive department, he must possess more extensive sources of information, as well in regard to domestic as foreign affairs, than can belong to Congress. The true workings of the laws, the defects in the nature or arrangements of the general systems of trade, finance and justice, and the military, naval and civil establishments of the Union, are more readily seen by, and more constantly under the view of the Executive, than they can possibly be of any other department. There is great wisdom, therefore, in not merely allowing, but in requiring, the President to lay before Congress all facts and information which may assist in their deliberations, and in enabling him at once to point out the evil, and to suggest the remedy. He is thus justly made responsible, not merely for a due administration of the existing systems, but for due diligence and examination into the means of improving them." It will thus be seen, by an intelligent reading of the section itself, and a clear conception of Justice Story's remarks thereon, that one of Mr. Cleveland's favorite maxims, "The duty of a President is simply executive," hardly covers the case. Though he has not the power of initiating measures in Congress, his authority in the way of advice comes so near it that the "middle wall of partition" which divides the two is transparently thin. Still, it is manifest that the Fathers must have intended to make a very clear distinction between the assertion of the one-man power and the "giving Congress information of the state of the Union," as well as the "recommending such measures as the President might consider expedient." In his closing remarks on that part of the Constitution which defines the "rights, powers and duties" of the executive department, Justice Story draws the following inferences and conclusions, which are worthy of being preserved in letters of gold: - " Unless my judgment has been unduly biased, I think it will be found impossible to withhold from this part of the Constitution a tribute of profound respect, if not of the liveliest admiration. All that seems desirable in order to gratify the hopes, secure the reverence, and sustain the dignity of the nation, is, that it (the executive department) should always be occupied by a man of elevated talents, of ripe virtues, of incorruptible integrity, and of tried patriotism; one who shall forget his own interests, and remember that he represents not a party, but the whole nation; one whose fame may be rested with posterity, not upon the false eulogies of favorites, but upon the solid merit of having preserved the glory and enhanced the prosperity of the country." What a valuable lesson for all who aspire to the presidency is contained in the noble and comprehensive language of the scholarly jurist, whose works shed durable luster on the bench of the United States Supreme Court which he adorned. The criticism of Ben Jonson regarding William Shakespeare, in literature and the drama, may very appropriately be applied to Joseph Story in law, jurisprudence, and ethics. "He wrote not for the age, but for all time." But to return to the question of Washington domination, as evidenced in the latter years of the Democratic regime. I think I have clearly shown that the assumption of the power which established for a time that domination over financial concerns and Wall Street affairs originated in a false and mistaken notion of both the legislative and administrative functions of a great republic. The experiment in both departments has been a costly one, but it is now perhaps worth more than it cost to the people of this nation, besides being of great benefit to all who read our political history.