DURING the summer of 1905, Dr. Butler of Columbia University
was granted an audience by the German Kaiser. They dis-
cussed various problems relating to their two countries, among
them finance. Who, asked Wilhelm II, managed government financial
matters in the United States?

"God," answered Dr. Butler. ¹

The inference, obviously, was that no one, not even J. P. Morgan,
had shown competence in dealing with this aspect of government. Some
years later, Professor J. Laurence Laughlin, who had attempted to in-
still some knowledge of economics into Theodore Roosevelt at Harvard
in the '8o's, called at the Outlook office where the ex-President was an
associate editor. Dr. Laughlin was anxious to obtain Roosevelt's support
in a movement for banking reform, but his former student said that his
knowledge of finance was largely limited to arguments against free sil-
ver: ". . . when it comes to finance or compound differentials," he
said, "I'm all up in the air." ²

This being so, it was unfortunate that Roosevelt was in the White
House during a period when the attitude of the public toward a national
monetary system was beginning to change. The Republican leaders of
1896 to 1900 felt that the problem had been settled when gold became
the indisputable basis of currency. Gold afforded protection for the na-
tion's financial institutions and for the man of wealth, or so it was be-
lieved. The new conception, which called for an elastic currency, de-
manded protection against panics for men of moderate means and those
of wealth alike. There is a vital difference between this philosophy,
which the most conservative economists endorsed in theory during the
pioneer work that led to the Federal Reserve Act, and the agitation for
free silver. In 1896, the gains of the masses would have been at the ex-
pense of the few.

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