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V Wednesday, October 20, 1954 Internal Memorandum Visit to 0. Howard Wolfe, October 14* 1954» at his residence in Milfordy Pennsylvania. Mr. Wolfe is a retired commercial banker who had the unusual experience of being a member of the preliminary committee which organized the Federal Reserve System. His name is not mentioned on the report of that organisation committee and it is not impossible that he was at that time an employee and not an actual member. At any rate, he served on the committee as a younger man working with a group of older men and he has clear memories of certain facets of the committ e e ^ work. Mr. Wolfe is valuable for three types of information - first, about individuals; second, about devices with which he had to doj and third, for his general picturing of toe atmosphere of the period. His own background when he went into the preliminary organization committee was that of a private banker who had gone from the Philadelphia Mational Bank to become secretary of the Glearing House section of the American Bankers Association. He had had some fourteen years experience before he went into the committee. He is still a very energetic person in spite of his years and heart condition. Obviously, he must have been full of ideas and energy in those days. He talked particularly about Parker Willis, Paul Warburg, and John Skelton Williams* He liked Parker Willis and describes him as a stocky short man with a high voice and a nervous habit of shaking his left shoulder back until his coat fell ofi£ whereupon he would pick it up and go on with his conversation, never having missed a word. He even carried this into times when he was walking in the street. Mr. Willis was an extraordinary lecturer. He would make out typewritten notes for a speech and two days later make the speech as though it were extemporaneous. Comparison with the typewritten notes would show almost verbatim use of them. Mr. Willis did not know anything about practical banking. He had taught banking theory at Columbia, but he had never actually worked in a bank. This, in Mr. Wolfe1 s opinion, was a distinct handicap. However, he considered Mr. Willis n a modest man11 even though very opinionated. At one time Parker Willis told Mr. Wolfe *I wrote every word of the Federal Reserve Act11 and Mr. Wolfe gives him credit for the accuracy of that statement. He said that Parker Willis was always willing to get bankers1 advice; that he sought it eagerly wherever he could and took a long western trip in order to get bankers to talk. He used very skilfully a technique of taking the opposite point of view from what he believed and letting himself be convinced by the bankers, thereby, winning their friendship as well as getting their point of view. Perhaps because of his affection for Parker Willis, Mr. Wolfe does not carry a happy memory of Carter Glass. He considered the latter a very rude and somewhat ruthless person for whom he seems to have had very little use. Considering the enmities and bias of the period this may very well mean that the quarters of Carter Glass did not like Parker Willis. Of Paul Warburg, Mr. Wolfe remembers that the organization committee used to send him to see Mr. Warburg. The latter had a heavy German accent and the European idea of banking. He was eager that the Federal Heserve Banks should charge for all their services and convinced that part of their obligation was to make money. Mr. Wolfe's idea and that of other proponents of the new system was that banking should be improved and cheapened for the benefit of the public. The old system was cumbersome, expensive and inefficient. In bringing about improvements and making it more efficient it should be thereby less costly. The -3argument was between people like Warburg who wanted to return the savings to the bank and those who wanted to give it to the people* Of John Skelton Williams, Mr. Wolfe had only criticism. According to him, the Virginians said that Mr, Williams was tfthe only man who could strut sitting down11. He did not like banks; yet he was responsible for getting the Federal Reserve Bank at Richmond against the counters-demands of Baltimore. He asked for impossible and useless statistics and laade himself thoroughly disliked. (This is the opinion of Mr. Wolfe*) Mr. Williams brought a suit against the M g g s Bank in 1914 which has been mentioned earlier. Details on this are contained in a memorandum by Mr. Wolfe of which we have had a copy made. As for the banking devices with which Mr. Wolfe has had connection and on which he has opinions, they number four - the Gold Settlement Fund of which he was the inventor, Par Clearance of which he is the ardent defender, Transit Numbers for bank checks which he invented, and Special Service Checking Accounts. (This may not be his precise phrase, but he was talking about checking accounts on which a service charge was made for the handling of each check.) Mr. Wolfe1 s claim to have invented the Gold Settlement Fund of 1915 is substantiated by a letter from Mr. Broderick dated January 1946 when Mr. Wolfe retired from his banking job. In that letter he praises Mr. Wolfe for the invention of the Gold Settlement Fund. In the history, which Parker Willis wrote, he merely considered the Gold Settlement Fund as part of the committee work and gives no individual credit. Mr. Wolfe1s story of the process was chiefly interesting because of its comment on how government worked. According to his story he had been called to Washington for work on this idea and went down at his own expense and without any hope of compensation. He devoted ten days working day and night to the project* At the end of that time he submitted a bill of #86, and was told that he must have all stubs and receipts before such an expense account could be honored• The indignation was vivid and vocal. Some time later he refused to submit such stubs or to sign an affidavit which was also requested* Congress passed an act awarding him #250 for his services. His comment on bureaucracy is also vivid. Mr. Volfe was a passionate advocate of par clearance. He regards the banks which still insist on clearing charges as engaging in tfa racket11. Much of his memory of the past was embodied in a typescript which he wrote for the Philadelphia National Bank where he spent most of his banking life. This was used as the basis for a book called The Philadelphia lational Bank written by licholas Wainwright and published in 1953* (Mr. Vainwright was editor of the Pennsylvania Magazine of History and Biography.) Some of those pages we have had copied and the reason for clearing charges was among them. Mr. Wolfe was very interesting in the reason for bank opposition to the act. He said that after it was written and before the act was taken up in Congress it was published in full in the New York Times. He gave as instance of the kind of opposition which the act aroused the refusal of William Woodward, President of the Hanover Bank, to even talk with Parker Willis about the act. He described in some detail the meetings which were held and the campaign which was put on in favor of the act. Apparently the American Bankers Association made gestures toward it» (This can be verified.) The opposition got so bad that some bankers went so far as to threaten to surrender their national charters (that is their charters as national banks) if the act were put through. These threats were not carried out. -5The other two inventions of Mr. ¥olfe, Transit Numbers for bank checks and Special Service Checking Accounts, were in the course of his business as a private banker and have no particular part in his connection with the Federal Reserve• One additional service he claims to have made in the writing of the act, he himself wrote the paragraph on which the assessments for member banks are based. It was originally to be 1/8 of 1% and was reduced to 1/12. (This can be checked,) Mr. Wolfe is a tall, slim, energetic, gray-haired man in his early seventies? living with his wife in an 18th century house in Milford which is a Delaware Eiver town, by-past by present comunications and therefore holding a good deal of its early chaxm. He has in his life written a great many articles, speeches, and other ephemeral comments on banking and Federal Reserve banking. He has no bibliography of his work and does not think that he could compile one. He would be useful for specific questioning on specific points concerned with his own experience. He is glad to cooperate, but his knowledge is somewhat limited by his short service in the preliminaries of writing the Federal Reserve Act. Nevertheless, he is friendly and on the points he knows would be glad to be useful. MA:lk
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