Carter Glass was a conservative, in the Burkean and Madisonian sense; Henry Steagall was a southern rural Democrat; and like many from the South his politics was populists in that he wished to protect the common man from the power of corporations, banks, and railroads. Together they help enact one of the most important Banking laws of the 20th Century the Glass-Steagall Act. While there were a number of provisions in the Glass-Steagall Act its most important functions were, as stated in Wikipedia:
The Banking Act of 1933 (Pub.L. 73-66, 48 Stat. 162, enacted June 16, 1933) was a law that established the Federal Deposit Insurance Corporation (FDIC) in the United States and imposed banking reforms, several of which were intended to control speculation. Specifically It was intended to erect a barrier between the activities of commercial banks and investment banks.
Carter Glass born in 1860, his early years were shaped by the cycles of boom and bust in reconstruction South. Booms and bust cycles that tore families’ asunder, booms and bust that left scars on countless communities across the South, to include his hometown, Lynchburg Virginia. As a result of his own experience and his observations Glass believe there was a proper role for government in controlling the excess of capitalism.
We must understand that Glass’ conservatism was very different that what passes for conservative thought today. He, like Edmund Burke and James Madison understood there was a need for government involvement in commerce; involvement to ensure a level playing field, involvement to protect the little guy from the inherent venality of those with power. Burke, Madison, and Glass would find appealing the nihilistic philosophy of Ayn Rand that seems to penetrate for what now passes as conservative thinking.
Glass and Steagall both had seen the destruction which unchecked speculation by banks with the money of their depositors had wrought on the South. One of the major portions of the Glass-Steagall was the creation of the Federal Deposit Insurance Corporation in order to protect depositors from having their life saving wiped out by the stupidity of the bankers.
Erecting barriers, protecting depositors, regulating and preventing bankers from doing what they too often have done through history—chase bright shiny objects in hopes of elusive larger profits. I had a very wise great uncle, George P. Foresman, who was a small town bank President in Southeastern Ohio for over fifty years. His father fortune had been wiped out in the 1880s because of his father speculation in horse racing, and because the bank where his money was deposited went under. Uncle George and my Grandfather went from middle class to poor overnight. As a result Uncle George was conservative, prudent, and frugal with not only his money but also the money of those whose money was deposited in his bank in Circleville Ohio. For the fifty years he was the President of that bank, his bank survived depression and recessions and prospered. About a year before he died I asked Uncle George what the cause of the Great Depression was, he thought for moment, rocked back on his heels, and said, “Henry, on the whole bankers are stupid.”
The Glass-Steagall Act was designed to protect against stupid bankers. As recent events have shown there are plenty of stupid bankers out there. Bringing back the Glass-Steagall Act is a proper first step in ensuring our economy is stable. History has proven the wisdom of the Glass-Steagall Act and the prophetic statement of my Great Uncle George. Let’s not repeat history.