On this day in 1916, the Senate Judiciary Committee postponed decision on Woodrow Wilson’s nomination of Louis D. Brandeis to the Supreme Court of the United States so it could wrangle further over whether he had “the temperament” to be a Justice. Anti-Semites.
Or perhaps they were more than anti-Semitic. Maybe the real problem was that Brandeis, as Senator Thomas Walsh (Democrat of Montana) said, “has exposed the iniquities of men in high places in our financial system. He has not stood in awe of the majesty of wealth.”
What had Brandeis done? He had, of course, stood for laborers’ rights numerous times, but principally he had written Other People’s Money: and How the Bankers Use It (hint: not well).
In it he included his earlier Harper’s Weekly article, “A Curse of Bigness”, where he argued that banks had made excessively large securities issues.
Size, we are told, is not a crime. But size may, at least, become noxious by reason of the means through which it was attained or the uses to which it is put.
Brandeis proposed limiting the uses of securities. “[W]e shall, by such legislation, remove a potent factor in financial concentration. Decentralization will begin.”
In other parts of the book, Brandeis goes on to challenge the conventional stereotype of the banker as conservative—on the contrary, he noted their “financial recklessness”—and he argued that Americans had systematically been “confusing the functions of banker and business man.” He argued for a system of smaller, more local banks.
I’ve been thinking of this lately, as our old friend urbino (who, alas, doesn’t come around here no more) has beaten almost every major pundit to the punch in arguing that if banks have grown too big to fail, then perhaps they ought to be stopped from supersizing themselves. (urbino: 1, 2, 3, 4, 5, 6, 7, 8.)
*You didn’t think I would stoop to calling this post “Size matters”, did you?