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absolute democracy, as each of the twelve "advisors", representing a 

different region of the United States, would be expected to speak up 

for the economic interests of his area, and each of the twelve 

members would have an equal vote. The theory may have been 

admirable in its concept, but the hard facts of economic life resulted in 

a quite different picture. The president of a small bank in St. Louis or 

Cincinnati, sitting in conference with Paul Warburg and J.P. Morgan to 

"advise" them on monetary policy, would be unlikely to contradict two 

of the most powerful international financiers in the world, as a scribbled 

note from either one of them would be sufficient to plunge his little 

bank into bankruptcy. In fact, the small banks of the twelve Federal 

Reserve districts existed only as satellites of the big New York financial 

interests, and were completely at their mercy. Martin Mayer, in The 

Bankers, points out that "J.P. Morgan maintained correspondent 

relationships with many small banks all over the country."30 The big 

New York banks did not confine themselves to multi-million dollar deals 

with other great financial interests, but carried on many smaller and 

more routine dealings with their "correspondent" banks across the 

United States.

Apparently secure in their belief that their activities would never be 

exposed to the public, the Morgan-Kuhn, Loeb interests boldly 

selected the members of the Federal Advisory Council from their 

correspondent banks and from banks in which they owned stock. No 

one in the financial community seemed to notice, as nothing was said 

about it during seventy years of the Federal Reserve System’s 

operation.