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.
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.
"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.
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.
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”
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.