Page "Glass–Steagall Act" Paragraph 17

Senator Glass supported a commercial banking theory ( associated with the real bills doctrine ) that commercial banks should limit their lending to short term “ self liquidating ” loans to finance the production and sale of goods in “ commercial ” transactions.

This theory, defended by Senator Glass ’ s long time advisor Henry Parker Willis, had served as a foundation for the Federal Reserve Act of 1913 and earlier US banking law.

Glass and Willis argued the failure of banks to follow, and of the Federal Reserve to enforce, this theory had resulted in the “ excesses ” that inevitably led to the Great Depression.