Warburg desired to organize American finances into a more pliable system. Doubtless in some respects he has wrought important improvements. But he had always the banking house in mind, and he dealt with paper. Now, if taking up a position outside those special interests, he would address himself to the wider interests of the people—not assuming that those interests always run through a banking house—he would do still more than he has yet done to justify his feeling that he really had a mission in coming to this country.
Mr. Warburg is not at all shocked by the idea that the Federal Reserve System is really a new kind of private banking control, because in his European experience he saw that all the central banks were private affairs.
In his essay on “American and European Banking Methods and Bank Legislation Compared,” Mr. Warburg says: (the italics are ours)
“It may also be interesting to note that, contrary to a widespread idea, the central banks of Europe are, as a rule, not owned by the governments. As a matter of fact, neither the English, French, nor German Government owns any stock in the central bank of its country. The Bank of England is run entirely as a private corporation, the stockholders electing the board of directors, who rotate in holding the presidency. In France the government appoints the governor and some of the directors. In Germany the government appoints the president and a supervisory board of five members, while the stockholders elect the board of directors.”
And again, in his discussion of the Owen-Glass Bill, Mr. Warburg says:
“The Monetary Commission’s plan proceeded on the theory of the Bank of England, which leaves the management entirely in the hands of business men without giving the government any part in the management or control . The strong argument in favor of this theory is that central banking, like any other banking, is based on ‘sound credit,’ that the