CHAPTER XI

THE MONSTER'S EXPENSES

YOU are going now to look over--and not overlook--the most stupendous, wasteful and exorbitant bank expense account ever entered on bank ledgers on this earth. You are going to look at the details of an expense account where the items run by millions, where expenses have no legal limit and where they are incurred, paid and audited without any supervisory authority. You are going to gaze at an expense account where the "sky is the limit."

Take first a look at the New York Federal Reserve Bank's expense account. That one is the most arrogant, wasteful and prodigal of all the twelve regional satrapies.

In 1917 the entire salary and wages account of the New York Federal Reserve Bank was $970,580 and their total loans and discounts were $399,078,000. Mark that down--salaries and wages of $970,580 and loans and discounts (which really measure the business of a bank) of $399,078,000, or $1 of expense to every $413 of loans and discounts.

On January 25, 1922, the salary and wages account of the New York Federal Reserve Bank was $4,988,703, with loans and discounts of $146,526,938, or $1 of expense to every $29 of loans and discounts!

Ask any practical banker, any administrative business man, any expert accountant or any efficient expert if it is possible to justify any such expense ratio. One to four hundred and thirteen in 1917 and one to twenty-nine in 1921--fourteen to one raise!

In 1917 there were 12 officers of that bank to administer loans of $399,078,000. In 1921 there were 40 officers of that bank to administer loans of $146,526,938. In other words, you get 28 more officers to administer a business shrunken down over sixty per cent! In other words, you get over a two hundred per cent increase in officers to administer a sixty per cent business shrinkage!

And now incidentally the pay of those 40 officers--administering a sixty per cent shrunken business--amounted to more money than the salaries of the President of the United States, the Vice President of the United States, half the United States Senate and the Governors of twelve American States besides! If that isn't bottomless bureaucratic greed expressed mathematically, you express it yourself!

Look further into the depths of this golden pool of New York Federal Reserve expense plunderbund. You are helping pay it and you are entitled to scrutinize the salary items. Take 'em as they come.

J. Crane entered the bank at a yearly salary of $1,080 as manager foreign department and now receives a yearly salary of $7,500, or an increase of 594 per cent.

A.J. Lins, manager at large, entered the bank at a yearly salary of $1,500 and now receives a yearly salary of $10,000 or an increase of 566 per cent.

John Raasch, manager supply department, entered the bank at a yearly salary of $1,000 and now receives a yearly salary of $6,000, or an increase of 500 per cent.

E.R. Kenzel, deputy governor, entered the bank at a yearly salary of $4,200 and now receives a yearly salary of $22,000, or an increase of 423 per cent.

A.W. Gilbart, controller of administrations, entered the bank at a yearly salary of $2,400 and now receives a yearly salary of $12,500, or an increase of 420 per cent.

L.R. Rounds, controller of accounts, entered the bank at a yearly salary of $2,400 and now receives a salary of $12,500, an increase of 420 per cent.

Chas. H. Coe, manager of the check department, entered the bank at a yearly salary of $1,500 and now receives a yearly salary of $7,200, an increase of 380 per cent.

W.B. Matteson entered the bank at a yearly salary of $2,400 and now receives $10,000, an increase of 316 per cent.

J.D. Higgins, controller of cash, entered the bank at a yearly salary of $3,000 and now receives a yearly salary of $12,000, an increase of 300 per cent.

S.S. Vansant, manager discount department, entered the bank at a yearly salary of $1,500 and now receives a yearly salary of $5,000, an increase of 233 per cent.

R.M. Gidney, controller at large, entered the bank at a yearly salary of $4,000 and now receives a yearly salary of $15,000, or an increase of 275 per cent.

I.W. Waters, manager personal service department, entered the bank at a yearly salary of $2,250 and now receives a yearly salary of $7,200, or an increase of 220 per cent.

James Rice, manager government bond department, entered the bank at a yearly salary of $1,800 and now receives a yearly salary of $5,500, or an increase of 205 per cent.

L.H. Hendricks entered the bank on a yearly salary of $6,000 and now receives a yearly salary of $18,000, or an increase of 200 per cent.

Incidentally Benjamin Strong, the governor of the New York Federal Reserve Bank, has had his salary increased from $30,000 per year to $50,000 per year--more than six times the pay of a United States Senator!

Ask any corporate manager, any practical banker, or any efficiency expert if they permit, or if they know of any such stupendous salary increases--increased and maintained in a time of general disaster and enforced economies. If this isn't strutting bureaucracy running amuck with public money, what is it?

Take now a look at the total expense account--which you are helping to pay--of the Federal Reserve System for the year 1921. It amounted to the stupendous sum of $36,066,065, or an average of $3,005,500 for each one of the twelve regional satrapies! You can't measure it--because there is nowhere on earth any other banking expense account by which to measure it! Like an Andean peak it towers aloft in solitary splendor. But you can look at some of the items. Here they are. The New York Federal Reserve Bank heads the list of extravagance with an expense account of $8,167,780, and the Minneapolis Federal Reserve Bank was the most modest--and not any too modest at that--with an expense account of $1,325,867. It cost you for bank officers' salaries $2,383,994, for clerk hire $15,201,393, for special officers and watchmen $789,879 and for "all other" $1,102,984. What that "all other" item of $1,102,984 really is, is deep buried in Federal Reserve archives. When you get through with bank officers, bank clerks, special officers and watchmen, you would think that included about all possible bank employees, but Federal Reserve ingenuity slips over $1,102,984 under the cloak of "all other!"

It cost you $7,750 for Federal Reserve Governors to "confer," $4,443 for Federal Reserve Agents to "confer" and $10,522 for the Federal Advisory Council--whatever that is--to "confer." "Conferences"--in bureaucracy--come high, don't they? And it cost you $168,556 to hold directors' meetings with 173 out of 254 of them living in the same town where the bank or its branch is located. Traveling expenses cost you $357,962--some travelers these Federal Reserve tourists are!

These bureaucratic "expenses" of a parasitical system hooked on to your banking system are stupendous, titanic, gigantic! They are indefensible--and undefended too--from any possible standpoint of efficiency, economy or necessity. Look them over in cold blood. Look over the stupendous salary raises--both in amounts and in percentages--in the New York Federal Reserve satrapy and compare them with any private business on earth. Private stockholders--not commandeered by law and not chained by act of Congress--would drive out any such maladministration of extravagance. You know it.

Who is responsible--directly, morally and legally responsible--for this orgy of Federal Reserve extravagance absolutely unequaled in the history of the world or in the history of banking? Why, the Federal Reserve Board at Washington is responsible. What makes them responsible? Here is the exact language. Read it. "Any compensation that may be provided by Boards of Directors of Federal Reserve Banks for directors, officers or employees shall be subject to the approval of the Federal Reserve Board." That's plain, isn't it? If the Federal Reserve Board at Washington doesn't "approve" these huge compensations, they can not be paid. It is the Federal Reserve Board at Washington--and no other authority on earth--which is responsible for the greatest orgy of expense ever strapped on the backs of staggering business. It's their ukase, it's their decree, it's their order which registers these titanic expenses--every penny of which is wrung from American producers of wealth! And they are political appointees--not elected, but appointed. The Federal Reserve Board at Washington really wields a power greater than any sceptered monarch ever swayed. At their nod or at their beck every Federal Reserve employee holds his job, for if they don't "approve" his "compensation" he can't attach his lips to the public teat with its golden flow of "compensation!" It's the Federal Reserve Board at Washington--unsupervised and with legally limitless power--which is responsible for this Federal Reserve expense orgy.