AGRICULTURAL INQUIRY.

TUESDAY, AUGUST 2, 1921.

CONGRESS OF THE UNITED STATES,

JOINT COMMISSION OF AGRICULTURAL INQUIRY,

Washington, D. C. The joint commission met, pursuant to call of the chairman, at 10 o'clock a. m., in room No. 70, Capitol Building, Representative Sydney Anderson (chairman) presiding.

The CHAIRMAN. The commission will come to order. The commission this morning will hear Hon. John Skelton Williams, former Comptroller of the Currency.

Mr. Williams, the commission is investigating, among other things, the causes of the present condition of agriculture; and the banking and financial resources and credits of the country, especially as affecting agricultural credits. The commission assumes that as Comptroller of the Currency you are familiar with the policies that have been adopted during the past 18 months, and that you will be in position to give the commission information upon which it can recommend a definite policy with reference to agricultural credits in particular. The commission will be glad to hear you develop the matter in any way that you desire to present it.

STATEMENT OF HON. JOHN SKELTON WILLIAMS, FORMER COMPTROLLER OF THE CURRENCY AND MEMBER OF THE FEDERAL RESERVE BOARD.

Mr. WILLIAMS. Mr. Chairman and gentlemen of the commission, the value of testimony depends not only upon the character of the witness and the study which he may have given to the particular subject which is under discussion, but also to a large extent upon the practical experience of the witness; and with the permission of the commission, I should therefore like to state briefly what my experience has been during the past quarter of a century.

For more than 30 years (except during the past eight years which I have spent in Washington as First Assistant Secretary of the Treasury and as Comptroller of the Currency) I have been a director, vice president, president, or chairman of trust companies and banks, both National and State, not only in the South, but also for a considerable portion of this period in Baltimore and New York City. Twenty years ago I was president or chairman of the trust company section of the American Bankers' Association, and member of the executive council of the American Bankers' Association.

More than 25 years ago I became president of a railroad company in the South, and three or four years later planned, organized, and was president of the Seaboard Air Line system, operating approximately 3,000 miles of railroad. I parted with my interests in that

property in 1904 and retired from its management, but about three years later when the property got into difficulties following the panic of 1907, I was urged to return to a participation in its affairs, aiding in its reorganization, which was probably the most successful ever carried through for a railroad of that size, the floating debt creditors being paid in full without assessment upon stockholders, and the credit of the company fully restored. I retired from membership in the board of directors and executive committee of the company a few months before coming to Washington in 1913.

Eight years ago, in 1913, I accepted from President Wilson and Secretary McAdoo the office of First Assistant Secretary of the Treasury, and by the President was designated Acting Secretary of the Treasury in the absence of Secretary McAdoo.

I declined the office of the Comptroller of the Currency when it was first offered to me, but later on when it was tendered a second time I accepted, and as comptroller had supervision over more than 8,000 national banks with 20,000,000 depositors and twenty-three billions of resources; I was also ex officio member of the Federal Reserve Board.

When the railroads were taken over by the Government in 1917, in addition to my other duties, I was appointed by Director General McAdoo, Director of the Division of Finance and also Director of the Division of Purchases, and as such arranged, under Director General McAdoo's direction, loans and advances of many hundreds of millions of dollars to the railroads; also supervised the purchases of about $2,000,000,000 worth of supplies and equipment for the 300,000 miles of railroads in the United States. In March, 1919, I resigned the offices of director of finance and purchases, which were held by me without remuneration, and those positions were subsequently filled by two able men, Congressman Sherley, former chairman of the Appropriations Committee of the House, becoming director of finance, and Henry B. Spencer, former vice president of the Southern Railway system, becoming director of purchases, at salaries of $25,000 per year, which were not large for the skill and responsibility involved.

I was also during the year 1918, by appointment of President Wilson, a member of the Capitol Issues Committee, and as such approved or rejected applications for the issuance of several billions of dollars of new securities. Those services were also rendered entirely without remuneration.

My appointments to public office have been three times confirmed by the United States Senate, practically unanimously each time. Upon the termination of my term as Comptroller of the Currency in 1919 I was reappointed, and my nomination was favorably passed upon by the Senate Banking and Currency Committee, but action by the Senate was prevented by a filibuster in the closing hours of the session. My renomination as comptroller was sent by the President to each succeeding session of the Senate. The Senate Committee on a strictly party vote refused to report favorably, but made no unfavorable report, although I urged them earnestly to make a report either favorable or unfavorable so that the Senate might act on it. This the chairman of the Banking and Currency Committee also refused to do. A member of the Federal Reserve Board who

saw Chairman McLean on the subject informed me immediately after his interview that Senator McLean agreed that I had made a good comptroller and said that he had nothing against me, and that as far as he was personally concerned, he would be willing to report the nomination favorably and have it confirmed, but that he had promised some one outside of the Senate that he would not do so, and was therefore restrained from favorable action; but that if the gentleman to whom he had given his promise would release him he would make, in behalf of his committee, a favorable report.

I think it only proper, gentlemen, that you should know plainly why my nomination was not reported or acted upon in the Senate. I am prepared to submit correspondence to corroborate the statement I have just made if it should be questioned or denied by anyone

Let me say at the outset that my criticisms are not and never have been directed against the Federal reserve system, but against the administration of that system. My admiration for the system and for the men who created it has been expressed continuously publicly and privately, and I ask to insert in the record the following extracts from my address at Washington in April, and from my more recent address at Augusta, Ga.

Before the Peoples' Reconstruction League at Washington April 15, 1921, I said:

The theory, conception, and purpose of the Federal reserve system are as near perfection as the human mind can produce. I am earnestly sincere in declaring that it was one of the most potent means for saving this country and the world during the war, and that without it hideous disaster would have come upon us. I can recall numerous occasions during these past few fateful years when without the aid of the Federal reserve system ruin would have been inevitable.

But no machinery can operate successfully indefinitely without intelligent supervision and direction.

Regardless of whatever flaws there may be in its administration, our Federal reserve system has, in the past, saved our country from conditions far worse than those which we are now enduring, and I believe that with the reversal of certain policies, and by the adoption of a constructive program the Federal reserve system could now aid enormously in restoring lost confidence and in inspiring hope and a justifiable optimism.

There has, in my opinion, been an indefensible withholding of credit in many of the producing sections of the country when sorely needed. I stated frankly at a meeting of the Federal Reserve Board not many weeks ago that a high ratio of reserve, indicating useless impounding of funds in reserve banks, under existing conditions, when money is so badly wanted for the vital purposes of agricultural and business of all kinds, is a thing for the board to be ashamed of, rather than to boast of.

At Augusta, Ga., I said in a speech, July 14, 1921, before the board of commerce and Georgia Press Association:

The Federal reserve act is the finest tool for commercial protection and construction ever put into the hands of a Government and people. I believe that by awkward and inefficient handling it has been used to injure where it was intended to guard, and to encourage and protect what it should have restrained and prevented.

I will also add that I know of no present or past member of the Federal Reserve Board who has worked harder to defend the Federal reserve law from the attacks of men within and without the board who would impair or multilate it, than Secretary McAdoo, Secretary Glass, and myself, assisted at times by Mr. Hamlin. Í refer here especially to the efforts which were made in 1915 to disestablish four of the 12 banks, and also to the efforts which were made from within the board to reduce the capital of the Federal icserve banks by one-half. I also joined heartily with Secretary

McAdoo in insisting that the Federal reserve system should be started promptly in November, 1914, despite the gloomy prophecies which were made by a certain element within the board who urged delay and predicted that if the banks should open at that time they would have to close within a few months.

I understand, Mr. Chairman and gentlemen, that I have been asked to appear before you because of certain public speeches which I have made recently in which I have discussed the Federal reserve system and its administration. If it is agreeable, and permissible for me to do so, I should like to present for your record three of these public addresses which have dealt with the Federal reserve system, one address being made in Washington, in April, and a recent address in Augusta, Ga., and one

Representative MILLS (interposing). Just one minute. It is not my understanding, Mr. Chairman, that Mr. Williams has been called before this commission because of any public utterances which he has made. It is my understanding that he is called before this commission by the request of one Member of Congress especially, and various other Members of Congress, because of his knowledge of the general credit situation. It is not my understanding that this commission is particularly interested in the charges which Mr. Williams made. against the Federal Reserve Board, and therefore it seems to me that the introduction of speeches in toto, containing a lot of irrelevant matter, should not be permitted in this record.

The CHAIRMAN. The chairman thinks that whatever statements are to be made here should be made in such a way as to be subject to examination and cross-examination, and that if the comptroller desires to bring to the attention of the commission the matters contained in his speeches, the matter should be read into the record, rather than inserted into the record, so that there will be opportunity for cross-examination.

Senator HARRISON. Mr. Chairman, I do not think there is any doubt that one of the reasons why Mr. Williams is before the commission is because of these speeches he has made. When he was called I understand the rule or policy of the commission was that he was to discuss these things that were contained in the resolution adopted by the Senate and House. If these speeches cover that subject matter, it seems to me it would be admissible.

Representative MILLS. They cover a lot of other things. Senator HARRISON. I do not know what they cover. read them.

I have not

Representative MILLS. They do cover a lot of other matters, and if those matters go into the record, it will necessitate a great deal of investigation on the part of this commission.

Representative TEN EYCK. What are the matters that do not pertain to the general conditions of the country?

Representative MILLS. We would have to read the speeches, and that is the reason why I think it is objectionable to put any matter into the record in this wholesale fashion, without any opportunity to know what is going into the record.

Senator HARRISON. You have been more fortunate than I, to be able to read the speeches.

Representative MILLS. I have been able to secure only one.

Senator ROBINSON. As a matter of fact, I think the speeches have all been printed in the Congressional Record.