of business those goals dictated support of the Republicans. After the tur-
bulent events of the early 1890s—Populist agitation, Coxey’s army, the
Pullman strike—that climaxed in the election of 1896, Schiff rejoiced in
McKinley’s victory: “Would the grass look as green, the sky as blue, the
people as pleasant” if the Republicans had lost? With little attention to the
changes demanded by Progressives, he stayed loyal to the party in the elec-
tions of 1900, 1904, and 1908. In 1912 he left the Republicans and deserted
Roosevelt, the Progressive candidate. A supporter of Woodrow Wilson,
largely because of his stand on the abrogation of a Russo-American treaty
(see below), he was unafraid of the Democrat’s agenda. Wilson was a mod-
erate and unlikely to upset national prosperity, he assured a European asso-
ciate. As for the campaign promises of the candidate’s New Freedom that
could affect business, well, “the soup is never eaten as hot as it is cooked.”^84
An outspoken opponent of cheap money and of an immoderate tariff at the
mercy of political influence, Schiff long harped on the necessity of banking
and currency reform. Since the National Banking Act of 1863 that had
governed the economy until 1913 was hopelessly unsuited to modern con-
ditions, he called for an elastic currency that contracted and expanded ac-
cording to changing economic needs. Toward that end, as he explained in
an article prepared for the American Academy of Political and Social Sci-
ence, he advocated the establishment of a central bank—an idea put forth
by his partner and brother-in-law, Paul Warburg—or a “central associa-
tion” of banks to be constituted by the banks themselves.^85 In 1912, shortly
after his election, Wilson sought the support of Kuhn, Loeb on behalf of a
new banking system. Allegedly aimed at Morgan’s power, banking reform
was a key ingredient of the New Freedom agenda, and Wilson’s advisers
consulted with Paul Warburg as well as Schiff. At first, Schiff thought that
government control might “revolutionize” the banking system, but he ap-
proved the passage of the Federal Reserve Act (1913).^86
On the subject of the rights of labor, Schiff’s business views were tem-
pered by other considerations. (With respect to the needle trades or “Jew-
ish” labor, as discussed below, he worried about the public’s reaction to
workers’ demands and industrial strife.) To be sure, Schiff feared the pos-
sibility of widespread social unrest at the turn of the century; and he, like
others of his class, deplored the increasing pressure of labor, which he de-
scribed as “arrogant” as corporations. Nevertheless, for humanitarian rea-
sons he strongly supported child labor legislation and the improvement of
working conditions. At the same time that the Supreme Court was whit-
tling down the weapons of organized labor, he readily accepted “proper”
and “responsible” labor unions. Before the Industrial Relations Commis-
sion of 1915 he stated: “I believe that the proper organization of employees
The Making of a Leader 29