Treaty of Washington

They knew that their big banking brothers were patching up peace with the White House but the rank & filers stepped off the train fairly smoking with hatred for the New Deal and all its ways. Four thousand strong, from the four corners of the land, they had gone to Washington to learn their fate from the lips of the President himself.

Most of them were bitterly resentful. They had never forgiven the President for branding them as "money changers" at his inaugural, for continuing to take sharp digs at them ever since. Only a few weeks before in a radio talk he had gone out of his way to give them another ugly poke, by comparing them unfavorably with the bankers of Old England. His lieutenants had badgered and ridiculed them for a year and a half. The vast majority wanted not peace but war. By the time the last delegate had registered last week there was not a doubt but what the 60th annual convention of the American Bankers Association was marked for history.

U. S. Banking in convention assembled is seldom a stirring spectacle. Wall Street banks generally dispatch vice presidents to represent them in ABA conferences and conviviality. But not so last week. The Manhattan delegation, biggest in years, included men like Winthrop Aldrich of Chase National, Gordon Rentschler of National City, Lewis Pierson of Irving Trust, Percy Johnston of Chemical Bank & Trust, S. Parker Gilbert of J. P. Morgan & Co.

These men did not journey to Washington to oppose the accession of Rudolf S. Hecht to the ABA presidency (TIME, July 2). The swart little New Orleans banker was elected with only one dissenting vote--from an unidentified Wilmington banker who uprose in the gallery, to cry: "I'm agin him!" The country's biggest bankers were on hand to ratify a treaty.

Like any rapprochement between two great powers, the peace between the bankers and the President had already been written behind locked doors. The protocol had been arranged in frequent visits to the White House, and the official ratification would be signaled by the speech the President had promised.

Therefore it was clearly up to the top-notch bankers to maintain order in the ranks until the President had spoken. No martinets, they failed. Outgoing President Francis Marion Law of the ABA might keynote about co-operation between the Government and the bankers but the delegates showed an alarming tendency to stand up and cheer for any speaker who damned the New Deal.

From the Democratic South appeared the head of Winston-Salem's Wachovia Bank & Trust, Robert M. Hanes of the rich and prolific North Carolina Haneses, drawling: "I admit frankly, that I am quite too stupid to understand the economic theories which are being expounded here at Washington." And the listening bankers howled with delight when he quoted Rhymster Ogden Nash:

The more you earn,

The less you keep,

And now I lay me down to sleep.

Voicing another banking fear, Editor Clinton B. Axford of the American Banker declared: "The national question today is whether we will solve the question of re-employment of our surplus labor before we exhaust the national credit."

From the great West appeared John G. Brown, counsel for the Montana Bankers Association, with a dour warning: "When, today they can destroy a contract between man and man, tomorrow some theorist may destroy a solemn contract between man and woman."

Though Administration speakers led by R. F. Chairman Jesse Jones, who just a year ago was exhorting the same bankers to "be smart for once," bubbled with peace & goodwill, the rumor spread that the President was disappointed with the unregenerate delegates, that he had decided to confine his speech to a breezy greeting. What happened after that is still a state secret. But a few hours before the bankers convened in Constitution Hall two men suddenly took pencil and paper and began to write. One was Franklin D. Roosevelt. The other was Jackson Eli Reynolds, president of Manhattan's First National ("Baker Bank), chairman of the organization committee of the Bank for International Settlements.

An Illinois farm boy, Jackson Reynolds went west to Stanford for an education. There his 190 Ib. of compact brawn made him a fearsome halfback on the football team managed by a youth named Herbert ("Bert") Hoover. When the late great George Fisher Baker discovered him, Mr. Reynolds was teaching law at Columbia University. One of his pupils was Franklin D. Roosevelt. Today the old teacher sees his prodigious pupil occasionally, but he is not rated a close Roosevelt friend.

Almost unknown to the man in the street, Banker Reynolds has never been formally interviewed. He may have won his millions in the citadel of conservative Republicanism but he has never lost his standing as a good Democrat. To the nation's bankers Jackson Eli Reynolds is an awesome figure astride the highest peak in the mountain range of Morgan banks.

Constitution Hall was park-jammed with starched-bosomed bankers and their ladies when President Roosevelt, four of his Cabinet and a few chosen bankers were finally settled on the stage. President Law said he was going to ask a favor: Mr. Reynolds was going to speak briefly before the President. The audience, impatient for the Presidential words, squirmed.

Mr. Reynolds stepped forward, laid his address on the rostrum and began to read in a slow earnest voice. His speech, which had been approved by all the high contracting parties involved, was the first he had ever made in his life. Said he:

"Because of events with which we are all familiar, there exists today, I regret to confess, evidence of misunderstanding between many of our country's bankers and those whose duty and responsibility it is to administer the affairs of the country.

"I am profoundly convinced that this contributes to the ills from which we are suffering, and I believe its removal will greatly promote the welfare of our country. I should like to address a few brief observations to the bankers tonight in the form of questions to which I ask no vocal response, but only that you shall answer them in your own secret selves.

". . . The first question is: Is it avoidable that either through private philanthropy or the appropriation of public funds the destitute, unfortunate and unemployed must be cared for?

"Second: . . . May we not be in error in expecting too early a date at which, even with the strictest economy and integrity of administration, the budget may be balanced? . . .

"Third: (And I put this question, I know, to men who passionately believe, as I do, that without monetary stability we face chaos.) If any one of us had the grave responsibilities and duties of the President of the United States . . . would we at one stroke both tie our hands vis-`a-vis the currencies of Europe and the Orient and risk consolidating into one irresistible program the inflationary demands here by making a statement today that the very definite stabilization of the dollar effected last January, and since maintained, should stand for all time and under all circumstances?

". . . I feel that the banking fraternity in the last two years has endured enough mass punishment so that it is now in such a chastened and understanding mood that you can accept with hospitality any overture of cooperation on the part of the leaders of that fraternity.

". . . I wish to make two statements which I sincerely believe to be true. The first is: In the last 27 days of March 1933. President Roosevelt contributed more to rescue and rehabilitate our shattered banking structure than any of us did individually or collectively. . .

"My second statement is: If the Government and the banks continue in the role of antagonists, it will involve the gravest consequences to our country, perhaps even the destruction of many institutions and principles we have long held dear.

"The poor, whom we have always with us, will not be much worse off. The rich will survive in comfort at least, as they always have, but the great stratum of our people between these two groups will be irretrievably ruined. If, on the other hand, we abandon our antagonisms for friendly, understanding, sympathetic cooperation, I believe we can make a great contribution toward . . . the gradual and sound rebuilding of the shattered economic and financial structure of our country."

The bankers were profoundly moved. And the President's speech which followed came close to being an anticlimax. Its significance lay largely in the fact that for once Mr. Roosevelt spoke not only civilly but graciously to the nation's bankers. As everyone knows, the President cannot say bluntly: "I want to balance the budget but I can't do it now." Instead he must say, as he said last week: "While there lies before us still the necessity for large expenditures for the relief of unemployment, I think we should all proceed in the expectation that the revival of business activity will steadily reduce this burden."

On profits: "It is in the spirit of American institutions that wealth should come as the reward of hard labor of mind and hand. That is what we call--and accept as--a profit system." And in that passage President Roosevelt made the only notable deviation from his prepared speech, inserting and stressing and accept as.

On the dollar: "I have been glad to note the growing appreciation in other nations of the desirability of arriving as quickly as possible at a point of steadiness of prices and values."

Only in reference to stabilization did the President succumb to the old temptation to twit Big Business. At reports that he "did not know what it was all about" he cracked back as follows: "Let me make it clear to you that the Government of the U. S. has daily and even hourly contact with sources of information which cover not only every State and section of our own country, but also every other portion of the habitable globe. This information is more complete, informative and accurate than that possessed by any private agency."

And lastly he tried to allay fears of further excursions by the Government into banking: "Just as it is to be expected that the banks will resume their responsibility and take up the burden that the Government has assumed through its credit agencies, so I assume and expect that private business generally will be financed by the great credit resources which the present liquidity of banks makes possible. Our traditional system has been built upon this principle and the recovery of our economic life should be accomplished through the assumption of this responsibility."

Sophisticated bankers asked for no more. But they were disappointed that President Roosevelt did not grasp more firmly the hand that Banker Reynolds had so handsomely extended. The President did not even acknowledge Banker Reynolds' speech. All he said was: "The time is ripe for an alliance of all forces intent upon the business of recovery. In such an alliance will be found business and banking, agriculture and industry, and labor and capital. What an all-American team that is!"

Next day a short resolution was steamrollered through the ABA machine, promising cooperation, requesting in very meek terms a balanced budget. But a majority of the delegates were as boisterously antagonistic as ever. They howled applause as Pundit David Lawrence delivered a sizzling attack on the New Deal. In their lobby talk they agreed with the New York Herald Tribune that the President had thoroughly ''buttered'' them.

Nevertheless, the peace treaty had been officially ratified. Rudolf Hecht, ABA President-elect, and three other ABA officials called at the White House. When they departed, Banker Hecht remarked to newshawks: ''We told the President that we were four ball players for the all-American team he proposed. . . . He accepted our proffer."

This file is automatically generated by a robot program, so reader's discretion is required.