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Christopher Shaw on the American Struggle to Make Banking Democratic

Christopher Shaw opens his book – Money, Power, and the People: The American Struggle to Make Banking Democratic (University of Chicago Press, 2019) – with profiles of three men – James Curley, Charles Arthur Floyd and George Richmond –  mayor, outlaw and pastor.

“The Reverend Richmond was an Episcopal priest,” Shaw told Corporate Crime Reporter in an interview last week. “He was something of a radical. He truly believed that Mammon should not be calling the shots in society and that there was a real conflict between gold and God. He did not hesitate to say so and publicly. That was kind of a shocking thing for a priest in a respectable denomination. When J.P. Morgan died, Richmond said that the world would get along better without Morgan.”

“J.P. Morgan died in 1913. In 1913, Richmond gives a sermon in his parish church in Philadelphia where he denounces Morgan and says that the world will get along much better without him.”

“James Michael Curley was a long time political boss in Boston. He served in the U.S. Congress. He was Governor of Massachusetts. He was mayor of Boston repeatedly – on and off from 1914 to the early 1940s. He thought the bankers had too much say in how the city of Boston was run. He was willing to threaten the banks when they withheld credit or when they wouldn’t grant loans. One time he threatened to flood their vaults by opening the city water main.”

“Charles Arthur Floyd – Pretty Boy Floyd –  was one of the Great Depression outlaws in the 1930s. He was most active in Oklahoma. He would rob banks. And he became a folk hero, especially in Oklahoma, where they called him the Sage Brush Robin Hood. The people of Oklahoma felt as if they had been under the bankers’ heel for a long time. And they saw Floyd as striking back against the bankers. He was known to give away money to those in need. And that was the legend.”

“They were three people from different walks of life and in different ways they were opposed to the great power that bankers had in American society in the early 20th century.”

Your book tracks the ebb and flow of these voices challenging the banking institutions. When was the height of the call for public control over financial institutions?

“There are two moments. The most intense was in the early portion of the Great Depression. The banks were failing and crashing. The entire economy was in meltdown mode. Thousands of banks were suspended during that time. The banks were making the depression much worse than it was. Unemployment was at least 25 percent. That was probably the most intense.”

“But also during the progressive era – from the Panic of 1907 up until the start of World War I –  there was a lot of civic engagement with these questions. Banking reform was on the table.”

Your book is filled with these historic figures who were engaged in what you call banking politics –  Marriner Eccles, Huey Long, Edward Filene, Bronson Cutting and Wright Patman.

Who was Wright Patman?

“Patman was sometimes called the last populist. He was a member of Congress from east Texas. He served in Congress for over forty years. He spent much time working on financial issues.”

“During the Great Depression, the Secretary of the Treasury was Andrew Mellon, one of the nation’s wealthiest men and most prominent bankers. He was a figure who was revered in banking and business circles. He was called one of the greatest Secretaries of the Treasury. But his business had been profiting while he was serving in the Cabinet – in part through government contracts. So, Wright Patman presented articles of impeachment against him.”

What happened to the impeachment resolution?

“Mellon resigned and Herbert Hoover appointed him to be Ambassador to Britain.”

Who was Huey Long?

“Huey Long is one of the more interesting political figures in U.S. history. He had a political machine in Louisiana and he did run it in a top down autocratic way. But he had a real policy agenda. He did a lot that was designed to make life better for the working people of Louisiana. This included building roads, building hospitals, making free textbooks available.”

“In the 1930s, he creates the Share Our Wealth Society. He wanted to get passed policies so that the share of wealth would be more equitable in the United States. This rested on the idea that you needed to decentralize power. This involves banking as well. Huey Long was skeptical of large banks.”

Another public effort came from Edward Filene.

“Filene was the force behind credit unions. Credit unions are cooperatives owned by their membership. They had to have a common bond. They lived in the same place, they worked in the same place, they worked together – something like that. And they would pool their money and loan their money to one another. These credit unions started out very small and got bigger over time.”

“It’s one of the most successful examples of cooperative enterprise in the country. Filene bankrolled it in the 1910s. It started growing during the depression. The federal government passed a law allowing credit unions to get federal charters. It has blossomed since then.”

“There are some very large credit unions – worth tens of billions of dollars each. Many bankers believe that the credit unions have too big of a share of the market and its unfair because they don’t pay taxes because they are non-profits.”

You talk about the decline and fall of banking politics. What led to the decline and fall?

“After World War II, it was just not on the scene the way it had been previously. The workers and farmers who were doing banking politics – they kind of win. They don’t get everything they wanted. But they get the FDIC, they get a Federal Reserve system that can manage an economy and stabilize it. They had a postal savings bank. There was a system to extend credit to farmers and homeowners.”

“The financial system was working for working people in a way that it just hadn’t in the early part of the 20th century. You had the separation of investment and commercial banking. That made it look like Wall Street was made to heel.”

“When social movements win or win at least  some of what they want, they will take away the incentive to participate.”

Your book ends during the Obama administration. Do you see a rise in banking politics since?

“Yes. It has come out of the blue. It’s not what it was. But people are talking about it again. You are seeing it with the candidacies of Bernie Sanders and Elizabeth Warren for President. You saw it with the Occupy Wall Street movement. Some in the Republican Party are complaining about too big to fail banks. Banking is being discussed again in a way that it really hasn’t been for decades.”

You are seeing it in the civic movement too. New groups are popping up like The Public Banking Institute. How does this new movement compare to the historic movements in your book?

“At that time, there was a heritage to draw on – dating back to the 19th century – a set of ideas that were radically different from the status quo. These were ideas that had been handed down from generation to generation. And you had these organizations where this was part of what they did. There was a root of this that doesn’t exist now.”

Other than Sanders and Warren, who else on the pubic scene are raising these issues?

“You don’t have someone like a Wright Patman who has this immense knowledge of the issue and who has been engaged with it for many years. There isn’t that legacy to draw on. But people are interested. They are talking about the issues.”

There is no Huey Long or James Curley or Wright Patman?

“Wright Patman had an in-depth knowledge of the Federal Reserve System. He sponsored studies of these issues. I don’t see that happening within the political arena. There are economists who are starting to speak out on these issues. But I don’t see a political figure like a Wright Patman.”

You dedicate your book to Alvin Jensvold. Who is that?

“That’s my grandfather. He was a model of an ordinary citizen interested in financial issues. He was from Montana. He grew up hearing these ideas — through the Farmers Union, the United Mine Workers, from the words of William Jennings Bryan. He had this knowledge. He lived through the Great Depression. He saw the power that finance had over society and over our lives. And he never hesitated to try to impress this upon me.”

“People might think that someone who was a union electrician and worked in the coal mines and in a furniture factory wouldn’t have this interest and knowledge. But he did. And he was a volunteer in the credit union where he worked. He is someone who would have been interested in this book. It was figures like him — ordinary people who understood the importance of finance, were informed about it — who made a difference.”

[For the complete q/a format Interview with Christopher Shaw, see 33 Corporate Crime Reporter 47(12), Monday December 9, 2019, print edition only.]

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