1929: Inside the Greatest Crash in Wall Street History--and How It Shattered a Nation - 45

On the morning of Friday, June 16, 1933, Senator Carter Glass stood in the anteroom to the Oval Office. He had been invited to the White House for what would be the most consequential moment of his life in public office.

Roosevelt was getting ready to leave Washington to vacation in Maine on his yacht, stopping first in Boston. But before his departure, he was finally ready to sign a bevy of bills, including the second Glass–Steagall Act, which would finally separate commercial and investment banking. Roosevelt described it as “ the best piece of banking legislation since the Reserve Board Act.” That, of course, was the other monumental achievement of Glass’s career, some twenty years earlier.

It was the end of a long road. Until recently, Glass had reason to doubt he would ever get there, complaining to friends that the president “never even lifted one little finger” to help the legislation. The ongoing trial of Charles Mitchell and the Pecora hearings had given the Glass–Steagall bill some much-needed political momentum.

As Glass made his way into the Oval Office and gathered around Roosevelt’s desk, the president, who would sign three other major bills that morning, took particular pleasure in congratulating Glass on his new law.

“ You old warrior!” the president declared, as they beamed for the photographers snapping pictures.

The bill managed to scrape through, in part, because Congress stayed in session to deal with a mounting debate over whether the government should pay veterans of World War I the same amount they had been originally granted now that the nation was in economic turmoil. Glass’s bill was passed as that battle played out.

“ If it had not been for the veterans,” Roosevelt told Glass, “Congress would have adjourned last Saturday and you would not have had your pet measure on the statute books.”

At exactly 11:15 a.m., Roosevelt brought out specially earmarked gold pens and signed the bill. Glass smiled and said that although the experience had nearly put him back in the hospital, he would do it all over again, if he had to. It was the crowning achievement of his career.

“ This bill has more lives than a cat,” said Roosevelt. “A cat has nine lives. This bill was killed fourteen times.”

Glass was handed one of the pens used to sign the bill and caressed it.

By the end of the bill signing ceremony, Roosevelt said, “ I’m getting writer’s cramp,” with a laugh. “I have signed more important bills here in about a half an hour than any president has signed in a year.”

The passage of Glass–Steagall into law made it official—Wall Street was never going back to the good old days. Within two years, banks and investment banks would have to be split into separate companies. There would be no carve-out for J.P. Morgan. Bank deposits would be insured up to $2,500. Between the new Glass–Steagall law and Mitchell’s ongoing trial—with his conviction a forgone conclusion—bankers would have to clean up their act.

When the bill was in its late stages, its passage still not assured, Glass had written to his friend Leffingwell at J.P. Morgan, giving him a sense of the toll it was taking on his life.

“ I have been utterly unable to give one particle of attention to personal correspondence, pending consideration of administration measures and the so-called Glass bank bill,” he said, explaining that he had also been ill. “I have not been in a position to communicate the alterations which have been made,” he wrote, suggesting he had kept them from Leffingwell to maintain the confidential nature of the discussions. Now that the bill was public, he was able to finally explain his thinking.

Leffingwell, understanding that public sentiment had shifted against Wall Street, replied: “There is so much hunger and distress that it is only too natural for the people to blame the bankers and to visit their wrath on the greatest name in American banking.”

The bill and Glass’s ascendance in the public discourse was considered such a significant capstone of Glass’s career that his hometown of Lynchburg, Virginia, planned to hold a “Carter Glass Day.” Glass, ever the curmudgeon, turned the honor down.