AMERICA'S BANK
THE EPIC STRUGGLE TO CREATE THE FEDERAL RESERVE
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"Roger Lowenstein has accomplished a small miracle..."
-David Nasaw, author of The Patriarch and Andrew Carnegie
"...a page-turner."
-Alan S. Blinder, American Economist and Author
“…an unusually lucid history of our nation’s central bank.”
-Kirkus Reviews
“Incisive and brilliantly researched, this is an important and original book about one of the most consequential pieces of legislation in our history with lessons aplenty for today.”
-Liaquat Ahamed, author of Lords of Finance:
A tour de force of historical reportage, America’s Bank illuminates the tumultuous era and remarkable personalities that spurred the unlikely birth of America’s modern central bank, the Federal Reserve.
For nearly a century, America, alone among developed nations, refused to consider any central or organizing agency in its financial system. Americans’ mistrust of big government and of big banks—a legacy of the country’s Jeffersonian, small-government traditions—was so widespread that modernizing reform was deemed impossible. Each bank was left to stand on its own, with no central reserve or lender of last resort. The real-world consequences of this chaotic and provincial system were frequent financial panics, bank runs, money shortages and depressions.
By the first decade of the twentieth century, the outmoded banking system was ill-equipped to finance America’s growing industrial prowess. But political will for reform was lacking. It took an economic meltdown, a high-level tour of Europe and—improbably—a conspiratorial effort by vilified captains of Wall Street, to overcome popular resistance. Finally, in 1913, Congress conceived a federalist and quintessentially American solution to the conflict that had divided bankers, farmers, populists and ordinary Americans, and enacted the landmark Federal Reserve Act.
Lowenstein tells the drama-laden story of how America created the Federal Reserve, thereby taking its first steps onto the world stage as a global financial power. America’s Bank showcases Lowenstein at his very finest: illuminating complex financial and political issues with striking clarity, infusing the debates of our past with all the gripping immediacy of today, and painting unforgettable portraits of Gilded Age bankers, presidents, and politicians.
Lowenstein focuses on the four men at the heart of the struggle to create the Federal Reserve. These were Paul Warburg, a refined German-born financier, recently relocated to New York, who was horrified at the primitive condition of America’s finances; Rhode Island’s Nelson W. Aldrich, the reigning power broker in the U.S. Senate and an archetypal Gilded Age legislator; Carter Glass, the ambitious, if then little-known Virginia congressman who chaired the House Banking Committee at a crucial moment of political transition; and President Woodrow Wilson, the academician-turned-progressive politician who forced Glass to reconcile his deep-seated differences with bankers and accept the principle (anathema to Southern Democrats) of federal control. Weaving together a raucous era in American politics with a storied financial crisis and intrigue at the highest levels of Washington and Wall Street, Lowenstein brings the beginnings of one of the country’s most crucial institutions to vivid and unforgettable life. Readers of this gripping historical narrative will wonder whether they’re reading about one hundred years ago or the still-seething conflicts that mark our discussions of banking and politics today.
REVIEWS AND COMMENTS
NEW YORK TIMES
Most Americans know the story of that hot Philadelphia summer in 1787 when prolonged debate led to the creation of the United States Constitution to overcome the inadequacies of the Articles of Confederation. Disagreements about the extent of federal power and the design of our democratic institutions were resolved through long arguments and, ultimately, principled compromises.
Few Americans, on the other hand, are familiar with the analogous history of periodic financial crises and economic duress throughout the 19th and early 20th centuries that gave rise to the creation of an effective American central banking system. Decades of fervent debate finally led to the enactment of the Federal Reserve Act in 1913. That is the story Roger Lowenstein tells, vividly and compellingly, in “America’s Bank.” It should be required reading for anyone who is engaged in, or interested in, the actions of the modern Fed, and the continuing debates about those actions and about its governance . . .
. . . thanks to Lowenstein, the largely untold story of the great financial debates of the 19th and early 20th centuries, together with the creation of our Federal Reserve System, can now take their rightful place in the history of American democracy and the evolution of the United States into a global financial power.
FORBES
Hunt for a good history of America’s coming of age in 1880 to 1920, and you’re likely to end up in one of two disappointing book bins. There’s the labored approach of professional historians, whose dry style stifles the underlying drama. At the other extreme: the juicy distortions of amateurs who know how to entertain, but who constantly yoke their “research” to the craziest conspiracy theories.
Wouldn’t it be nice if someone could revisit the age of muckrakers, Progressives, railroad barons and the “Money Trust,” and bring it all to life with clarity and brio? Fortunately, such a book has arrived. It’s by Roger Lowenstein, a former Wall Street Journal reporter who’s become well-known for a best-selling biography of Warren Buffett as well as a variety of books about Wall Street’s greatest crises. (I worked a few desks away from Lowenstein in 1991 or so.) . . .
. . . “America’s Bank” has already won endorsements from two former Fed chairmen: Paul Volcker and Ben Bernanke. But this is hardly a sanitized history of how their institution came to be. In fact, the fun of the book — and its enduring value — lies in the rich details about the cranks, pawns and prophets who jousted with one another in the days of Teddy Roosevelt, William Taft and Woodrow Wilson.
The true ingenuity of America in 1913 is that it could combine the energies of so many vain, bickering factions, and somehow unite them in a way that translated into progress. At some level, the campaign to create the Fed drew strength from everyone — even the pompous bankers doing their scheming on a fake hunting trip to Georgia, the angry muckrakers taking aim at Wall Street, and the obstructionist Congressman from Minnesota whose father fled Sweden after being accused of bank embezzlement.
WASHINGTON POST
"an illuminating history of the Fed’s unlikely origin story"
The language used to describe the working of the central bank — Fedspeak, as it is known — is famously obfuscatory. But Lowenstein, a financial journalist and author of books on the financial crisis and Warren Buffett, has a great facility for constructing highly readable narratives about complex financial topics. In his telling, America’s central bank came about through political and intellectual horse-trading among a German-Jewish immigrant banker, a patrician Republican from New England and a states-rights Democrat from rural Virginia.
OMFIF BULLETIN
Perplexed foreigners trying to understand the American Tea Party and 'Audit the Fed' Movement may be interested to learn that, far from being aberrations, these phenomena have deep historical roots and reflect concerns that date right back to the founding of the Republic. At bottom lies a deep suspicion of centralised authority and large banks.
In his masterful book, America’s Bank – The Epic Struggle to Create the Federal Reserve, Roger Lowenstein, the American journalist and author, chronicles the events leading up to the creation of the Federal Reserve, and the political compromise that led to its current structure – a centralised board of governors and 12 decentralised regional banks. It is a gripping story, rich in historical detail and informative minutiae.
STRATEGY+BUSINESS
Sometimes, it’s useful to read history for the pure entertainment of it — riveting stories of battlefield adventure, for example. Other times, we read history to understand more about the people who shaped the future of the world. But a small, satisfying subset of history books can also shed light on current events. They shrewdly point out that phenomena that may seem to be entirely products of our time are in fact just the latest iterations of debates that echo through decades and centuries.
America’s Bank: The Epic Struggle to Create the Federal Reserve, by Roger Lowenstein, falls into this last category.
INSTITUTIONAL INVESTOR
Lowenstein delivers a day-by-day account of the long-secret meeting on Georgia’s Jekyll Island, where in 1910 an influential senator and a prominent banker hatched the plan for the institution that would become the Federal Reserve, the world’s most powerful central bank.
FINANCIAL TIMES
In America’s Bank, his well researched and smoothly written account, Roger Lowenstein explores how the Panic of 1907 led to the birth of the Federal Reserve in 1913. This was an epochal moment: the start of New York’s eclipse of London in international finance and a big step towards the US becoming a centralised superpower. It is worth understanding what happened, not least because the Fed is as controversial today as it was then.
America’s Bank shows how the Fed was born in response to a banking panic and it has much relevance to the crisis of 2008.
EH.NET
America’s Bank is cogent, informed, and opinionated, but also polished, enlightening, and entertaining. The book is a work of scholarship based upon primary sources and demonstrating mastery of the academic literature. It could have been submitted as a doctoral dissertation in history at most universities in the United Sates, but it captures readers’ imaginations in ways that academic writing seldom does. It tells a story with heroes, like Paul Warburg, and ghosts, like Andrew Jackson, and brings to life politicians whose names every school child in the United States remembers, like Woodrow Wilson and William Jennings Bryan, and that most people have forgotten, like Carter Glass and Nelson Aldrich . . .
From these personal accounts and the conventional academic literature, Lowenstein has crafted a compelling narrative that is accurate, informative, and fun to read . . .
I think America’s Bank is worth reading repeatedly.
THE REFORMED BROKER
Lowenstein’s book tells the story of how it came to be that a Democratic president – representing the party of Jacksonian anti-bank rhetoric and the anti-Wall Street populism of William Jennings Bryan – would ram the bill through against incredible odds. The creation of the Fed in 1914 could not have happened at a more opportune moment. Within months of its launch, America’s new banking and government bond system would face its first real test – the financing of our entrance into World War I. Without the Fed in place to create and direct capital efficiently and swiftly, the outcome of the war may have been quite different.
America’s Bank is a great read, rich with historical detail along with a wealth of fascinating characters who propel the narrative forward.
SEEKING ALPHA
America's Bank: The Epic Struggle to Create the Federal Reserve (Penguin, 2015), is yet another tour de force. As over sixty pages of end-notes indicate, he did extensive research, but he writes gracefully, as if telling a familiar story.
In its broadest outlines, the founding of the Federal Reserve Bank is a familiar story, at least to anyone who has a passing interest in the U.S. financial history. But Lowenstein shows just how critical, difficult, and in the end miraculous it was . . .
. . . Lowenstein explores the hopes and dreams of the men who were instrumental in the creation of the Fed, and he shows how the sausage was made. America's Bank is an engrossing story.
800CEOREAD
Roger Lowenstein is the author of many bestselling books, but the two he’s most well known for are When Genius Failed (which Jack named one of The 100 Best Business Books of All Time) and The End of Wall Street. His new book is sure to join those two at the top of the pantheon of his work.
“a brilliant stroke of perfectly executed narrative”
“required reading"
FORTUNE
We’re all Fed watchers today, nervously eyeing Janet Yellen & Co. as they manipulate interest rates to shepherd the economy. So it’s bracing to be reminded that before 1913 the U.S. didn’t have a Federal Reserve—or a unified banking system or even a uniform currency—and that consequently America was a global laggard, subject to constant economic panics that crippled businesses and farms. Depicting the effort to create a central bank, Fortune contributor Lowenstein tells a gripping tale with a trove of vivid characters and period details; you can almost see the handlebar mustaches and smell the oyster stuffing. And the broader cultural conflicts he describes—distrust of centralized authority, tension between Main Street and Wall Street—are just as relevant now as they were in the era of Taft, Teddy, and Woodrow Wilson.
CLEVELAND FED FOREFRONT
Roger Lowenstein’s America’s Bank: The Epic Struggle to Create the Federal Reserve is an outstanding book on the founding of the Fed, accessible to the lay reader and satisfying to the expert. Focusing on the primary actors in bringing the Fed into being and on the period of 1907 to 1914, Lowenstein dispels the air of inevitability surrounding the Fed and its structure. The book’s great contributions come from examining the individuals involved and through mining primary materials such as letters, diaries, memoirs, early versions of the Fed proposal, and the records of congressional hearings.
REUTERS BREAKINGVIEWS
The Federal Reserve’s influence is so pervasive that we cannot imagine a world without it, writes Roger Lowenstein in his new book . . . Yet Americans have always blown hot and cold about their own central bank.
NEW YORK JOURNAL OF BOOKS
"America’s Bank is Roger Lowenstein’s highly entertaining, informative, and readable chronicle . . ."
PUBLISHER'S WEEKLY
This superb chronicle by Lowenstein (Buffett), a former Wall Street Journal reporter, traces the formation of America’s Federal Reserve. Lowenstein helpfully reminds readers that at the start of the 20th century, the U.S. was the world’s sole industrialized nation to lack a central banking system, following two failed attempts, in 1791 and 1816, respectively, and a charter vetoed by President John Tyler in 1841. With many Americans, especially those in rural areas, suspicious of both banks and the federal government, the idea of a government-run banking system was widely unpopular. Lowenstein identifies four figures as integral in turning the tide, starting with Paul Warburg, a German immigrant who believed the American system should mimic the European model, and Sen. Nelson Aldrich, an ambitious, successful Republican from Rhode Island who was the subject of intense criticism by muckraking journalists. Centralization was also championed by President Wilson and Rep. Carter Glass, a Virginia Democrat, who was charged with creating a plan that would balance reform with states’ rights. Lowenstein vividly recounts the key moments in this hard-fought battle, from the Panic of 1907 to the 1912 presidential campaign to Wilson’s impassioned declaration to a joint session of Congress. Captivating and enlightening, this book brings a pivotal time in American history to life. Agent: Melanie Jackson, Melanie Jackson Agency. (Oct.)
KIRKUS
The story of the creation of the Federal Reserve.
In the mid-19th century, American banking was antiquated and chaotic. In other industrialized nations, centralized banking systems ensured monetary stability. By contrast, the banks in the United States were “disconnected and isolated, left to prosper or flounder (or fail) according to the reserves of each individual institution.” Most were small, rural institutions chartered by state governments and issuing thousands of currencies. As a result, there were frequent “financial panics, bank runs, money shortages, and indeed, full-blown depressions,” bank failures, and note forgeries were commonplace. But as veteran financial journalist Lowenstein (The End of Wall Street, 2010, etc.) makes clear in this dramatic creation story, Americans remained wary of the idea of a central bank. “When the subject was money, central authority had always been taboo; it was a demon that terrified the people,” he writes. Mainly rural Americans favored “the comfortable Jeffersonian principle of small government.” After the severe Panic of 1907 (when financier J.P. Morgan stepped in to shore up the banking system), Sen. Nelson W. Aldrich formed a commission whose investigation of the crisis paved the way for passage of the Federal Reserve Act of 1913. Lowenstein traces the heated congressional battles that led to establishment of the Federal Reserve System, consisting—then as now—of 12 banks with power shared between the federal government and private banks and with responsibility for supervising the banking system, setting short-term interest rates, and guiding national monetary policy. His well-researched account for general readers takes us from Aldrich’s secret meeting with leading Wall Street figures on Jekyll Island, off the Georgia coast, to plot banking reforms, to Woodrow Wilson’s Princeton bedchamber, where the ill president persuaded Virginia Congressman Carter Glass of a key compromise to ensure creation of a national bank.
Lowenstein doubts the Federal Reserve Act could be passed in today’s volatile political climate, but he provides an unusually lucid history of our nation’s central bank. (Aug. 1st, 2015)
LIBRARY JOURNAL
Lowenstein skillfully shows the connections between past and current events. VERDICT Readers seeking a comprehensive history of the Federal Reserve from its conception to modern times will find this work especially appealing.
FIRST TO READ
America's Bank reads like historical fiction, with lots of insight into the people and politics of the times... definitely not a dry economics lesson! The personalities and politics haven't changed much, and the similarities to issues in today's global markets is astounding (China's recent currency actions just sent our stock market into a spin cycle). The Federal Reserve's manipulation of interest rates is now accepted as standard practice, so learning about how they came to be and the issues/concerns of the time was very insightful. I found it very difficult to put down and highly recommend it for anyone who likes non-fiction... even if you don't care for economics! --Terri Wolfrom, Jessup
[America’s Bank] is packed full of the times, the people, and the politics in the making of The Federal Reserve Bank. The author, Roger Lowenstein, provides insight into the ideals of the players involved in determining the form and function of the Federal Reserve Bank: their personalities, family, politics, finances, the many interconnections with Wall Street, and other interesting details on banking customs from before the Civil War and forward that went into play. ...the author approached this as a puzzle: each person that he mentioned was a piece to the puzzle, and was given a full background of early experiences, political leanings and personal connections to give each piece depth and clarity. I was fascinated to see the connections between banks and Wall Street... I strongly recommend this book to anyone who loves history in general, and specifically banking history and politics of the 1800s and 1900s. A fascinating read, engaging and informative. Many thanks to First to Read for providing me a galley proof of this excellent book. --Dianne Stephany, Rochester