On this day in 1916, the Senate Judiciary Committee postponed decision on Woodrow Wilson’s nomination of Louis D. Brandeis to the Supreme Court of the United States so it could wrangle further over whether he had “the temperament” to be a Justice. Anti-Semites.
Or perhaps they were more than anti-Semitic. Maybe the real problem was that Brandeis, as Senator Thomas Walsh (Democrat of Montana) said, “has exposed the iniquities of men in high places in our financial system. He has not stood in awe of the majesty of wealth.”
What had Brandeis done? He had, of course, stood for laborers’ rights numerous times, but principally he had written Other People’s Money: and How the Bankers Use It (hint: not well).
In it he included his earlier Harper’s Weekly article, “A Curse of Bigness”, where he argued that banks had made excessively large securities issues.
Size, we are told, is not a crime. But size may, at least, become noxious by reason of the means through which it was attained or the uses to which it is put.
Brandeis proposed limiting the uses of securities. “[W]e shall, by such legislation, remove a potent factor in financial concentration. Decentralization will begin.”
In other parts of the book, Brandeis goes on to challenge the conventional stereotype of the banker as conservative—on the contrary, he noted their “financial recklessness”—and he argued that Americans had systematically been “confusing the functions of banker and business man.” He argued for a system of smaller, more local banks.
I’ve been thinking of this lately, as our old friend urbino (who, alas, doesn’t come around here no more) has beaten almost every major pundit to the punch in arguing that if banks have grown too big to fail, then perhaps they ought to be stopped from supersizing themselves. (urbino: 1, 2, 3, 4, 5, 6, 7, 8.)
*You didn’t think I would stoop to calling this post “Size matters”, did you?


11 comments
April 3, 2009 at 11:57 am
andrew
Too big to fail is another way of saying too big to succeed (without massive levels of government help).
April 3, 2009 at 11:59 am
ari
You didn’t think I would stoop to calling this post “Size matters”, did you?
You exude class.
April 3, 2009 at 12:04 pm
Hemlock
Long-time readers also miss urbino’s contributions, contentions, debates, etc.
April 3, 2009 at 12:11 pm
ekogan
Wikipedia says:
Brandeis Brief
Brandeis, acting as a litigator, submitted a legal brief containing empirical data collected from hundreds of sources. In what became known as the “Brandeis Brief”, he provided the Court with sociological information on the issue of the impact of long working hours on women. This was the first instance in the United States that social science had been used in law and changed the direction of the Supreme Court and of U.S. law.
I wonder what effect the use of social science studies as evidence had on the size of the academic community. AFAIK, the US has long been the academic leader in economics and sociology. Is it because of the extra employment offered to scientists by the Brandeis Brief?
April 3, 2009 at 1:13 pm
rea
I wonder what effect the use of social science studies as evidence had on the size of the academic community
Well, but what was controversial about a “Brandeis brief” is that the data he cited was not introduced in evidence at the tiral court level. Rather, he was arguing that an appellate court ought to look at scientific literature in much the same way it looks at statutes, or caselaw, using it to decde legal issues rather than factual issues.
April 3, 2009 at 1:52 pm
urbino
I still read along, though it’s more like skimming, these days. Life has gotten busier, and I’m trying to give more attention to generating content at the Hippos.
Thanks for the blove. And to you as well, Hemlock.
April 3, 2009 at 2:04 pm
eric
That’s the blog version of “It’s not you, it’s me”, isn’t it?
April 3, 2009 at 2:09 pm
urbino
mumble mumble
BTW, does this post mean I can add you to the Knights Who Say, or are you mulling the issue?
April 3, 2009 at 2:16 pm
eric
You can add Brandeis, for sure.
April 4, 2009 at 4:25 am
AWC
_Other People’s Money_ is a bit dull and repetitive. Some of Brandeis’ proposals are very dated. But if I’ve learned anything, it’s that Brandeis was always right. Everybody knows about his endorsements of sociological jurisprudence, public regulation, and civil liberties. But his vision of labor relations, expressed as early as 1903 and written into the garment maker’s “Protocol of Peace” he negotiated, predicted the Reutherite compact of the 1940s.
As I read it, Brandeis’ attack on bigness encompasses two points:
1) We can’t trust private interests to operate the businesses that had become vital to the functioning of the economy itself. Brandeis meant this not merely as an attack on their greed, but also their competence.
2) The accumulation of private economic power represents a threat to republican government. I’m not convinced that small banks are innocent in our current situation (they often issued the bad loans, then sold them to banks like Citi), but, as Eric suggests, those banks aren’t big enough to corrupt recovery policy.
April 9, 2009 at 10:30 pm
andrew
I just read McCraw’s 1985 reconsideration of Brandeis in the American Scholar. Presumably his criticism of Brandeis’ opposition to bigness is laid out more thoroughly in Prophets of Regulation, which I’m about to read, but as it stands in the article, it’s not very convincing. That said, until I know more about the details of Brandeis’ beliefs, I’m not ready to take his side entirely either.