William Gibbs McAdoo

William Gibbs McAdoo
46th United States Secretary of the Treasury
In office
March 6, 1913 – December 15, 1918
President Woodrow Wilson
Preceded by Franklin MacVeagh
Succeeded by Carter Glass
United States Senator
from California
In office
March 4, 1933 – November 8, 1938
Preceded by Samuel M. Shortridge
Succeeded by Thomas M. Storke
Personal details
Born William Gibbs McAdoo, Jr.
October 31, 1863
Marietta, Georgia, U.S.
Died February 1, 1941 (aged 77)
Washington, D.C., U.S.
Resting place Arlington National Cemetery in Arlington, Virginia, U.S.
Political party Democratic
Spouse(s) Sarah Hazelhurst Fleming (1885 – 1912; her death)
Eleanor Randolph Wilson (1914 – 1934, divorced)
Doris Isabel Cross (1935 – 1941; his death)
Children Ellen Wilson McAdoo
Mary Faith McAdoo
Parents William Gibbs McAdoo, Sr.
Mary Faith Floyd McAdoo
Alma mater University of Tennessee
Profession Politician, Lawyer
Religion Episcopalian

William Gibbs McAdoo, Jr.[1] (October 31, 1863 – February 1, 1941) was an American lawyer and statesman. McAdoo was a leader of the Progressive movement who played a major role in the two presidential administrations of Woodrow Wilson. He was Wilson's campaign manager in 1912; he married Wilson's daughter, and served as his secretary of the Treasury. He was primarily responsible for financing the American side of World War I, providing large loans to the Allies, and running the troubled railroad system inside the United States. He was a leading contender for his party's presidential nomination in 1920 and 1924 and served as Senator from California as a Democrat.

Biography

Early life and career

McAdoo was born near Marietta, Georgia, the son of author Mary Faith Floyd (1832–1913) and attorney William Gibbs McAdoo, Sr. (1820–1894). His uncle, John David McAdoo, was a Civil War general and a justice on the Texas Supreme Court.[2] McAdoo attended rural schools until his family moved to Knoxville, Tennessee, in 1877, when his father became a professor at the University of Tennessee.

He graduated from the University of Tennessee and was a member of the Kappa Sigma Fraternity Lambda Chapter. He was appointed deputy clerk of the United States District Court for the Eastern District of Tennessee in 1882. He married his first wife, Sarah Hazelhurst Fleming, on November 18, 1885. They had seven children: Harriet Floyd McAdoo, Francis Huger McAdoo, Julia Hazelhurst McAdoo, Nona Hazelhurst McAdoo, William Gibbs MacAdoo III,[1] Robert Hazelhurst McAdoo, and Sarah Fleming McAdoo.

He was admitted to the bar in Tennessee in 1885 and set up a practice in Chattanooga, Tennessee. In the early 1890s, he lost most of his money trying to electrify the Knoxville Street Railroad system.[3][4] In 1892 he moved to New York City, where he met Francis R. Pemberton, son of the Confederate General John C. Pemberton. They formed a firm, Pemberton and McAdoo, to sell investment securities.

In 1895, McAdoo returned to Knoxville and regained control of part of his bankrupt streetcar company (which had been auctioned off). In subsequent months, he engaged in a continuous struggle with Ohio businessman C.C. Howell over control of the city's streetcar system, culminating in a bizarre incident known as the Battle of Depot Street.[4] Litigation in the aftermath of this incident favored Howell, and McAdoo abandoned his streetcar endeavors in 1897 and returned to New York.[4]

Around the start of the 20th century, McAdoo took on the leadership of a project to build a railway tunnel under the Hudson River to connect Manhattan with New Jersey. A tunnel had been partly constructed during the 1880s by Dewitt Clinton Haskin. With McAdoo as President of the Hudson and Manhattan Railroad Company, two passenger tubes were completed and opened in 1908. The popular McAdoo told the press that his motto was "Let the Public be Pleased." The tunnels are now operated as part of the Port Authority Trans-Hudson (PATH) system.

His first wife died in February 1912. That year, he served as vice chairman of the Democratic National Committee.

In March 1919, McAdoo co-founded the law firm McAdoo, Cotton & Franklin, now known as white shoe firm Cahill Gordon & Reindel. He left the firm in 1922 and moved to California to continue his political career.

Secretary of the Treasury

Woodrow Wilson lured McAdoo away from business after their meeting in 1910. He worked for the Wilson presidential campaign in 1912. Once he was President, Wilson appointed McAdoo Secretary of the Treasury, a post McAdoo held from 1913 to 1918.[5][6][7]

He married Wilson's daughter Eleanor Randolph Wilson at the White House on May 7, 1914.[8] They had two daughters, Ellen Wilson McAdoo (1915–1946) and Mary Faith McAdoo (1920–1988). Ellen married twice and had two children.[9] Mary married three times, but had no children. McAdoo's second marriage ended in divorce in July 1935, and he married a third time, to Doris Isabel Cross, in September 1935.

McAdoo offered to resign when he married the President’s daughter but Wilson urged him to complete his work of turning the Federal Reserve System into an operational central bank. The legislation establishing the System had been passed by Congress in December 1913.

As head of the Department of the Treasury, McAdoo confronted a major financial crisis on the eve and at the outbreak of World War I, July – August 1914.[10] During the last week of July, 1914, British and French investors began to liquidate their American securities holdings into U.S. currency. Many of these foreign investors then converted their dollars into gold, as was common practice in international monetary transactions at the time, in order to repatriate their holdings back to Europe. If they had done this, they would have depleted the gold backing for the dollar, possibly inducing a depression in American financial markets and in the American economy as a whole. They might then have been able to buy American goods and raw materials (for their war effort) at greatly depressed prices, which the Americans would have had to accept in order to restart the economy from a consciously (albeit inadvertently) caused depression.

"A long man with a long head". Puck cartoon, 25 April 1914.

McAdoo's actions at the time were both bold and outrageous. The United States in 1914 was still a net debtor nation (i.e., Americans' aggregate debt to foreigners was greater than foreigners' aggregate debt to Americans). The nations of Europe and their financial institutions held far more in debt of the United States; of many of the states of the Union; and of American private institutions of all kinds, than investors in the United States held in the debt of Europe's nations and institutions in all forms, both public and private.

McAdoo kept the U.S. currency on the Gold Standard. He arranged the closing of the New York Stock Exchange for an unprecedented four months in 1914 to prevent Europeans from selling American securities and exchanging the proceeds for dollars, and then gold.

Economist William L. Silber wrote that the wisdom and historical impact of this action cannot be overemphasized.[10] McAdoo’s bold stroke, Silber writes, as a first consequence averted an immediate panic and collapse of the American financial and stock markets. But also, it laid the groundwork for an historic and decisive shift in the global balance of economic power, from Europe to the United States; a shift which occurred exactly at that time. More than this, McAdoo's actions both saved the American economy and its future allies from economic defeat in the early stages of the war.

Investors in the warring countries had no access to their holdings of US financial assets at the outset of the war because of McAdoo’s actions. As a result, the treasuries of those countries more-quickly exhausted all of their net foreign exchange holdings (those that were on-hand and in their possession before McAdoo closed the markets), currency, and gold reserves. Some of them then issued sovereign bonded indebtedness (IOUs) to pay for the war materials they were buying on the American and other markets.

Silber wrote that the intact and undamaged American financial system and its markets managed the flow and operation of this financing more easily than they would have without McAdoo's measures, and that US industry swiftly built up to the scale needed to meet the allied war needs. The managed liquidation of foreign holdings of US assets moved the United States to a net creditor position internationally and with Europe from the net debtor position it had held prior to 1915.

In order to prevent a replay of the bank suspensions that plagued America during the Panic of 1907, McAdoo invoked the emergency-currency provisions of the 1908 Aldrich Vreeland Act. William Silber credits his actions for having turned America into a world financial power, in his book When Washington Shut Down Wall Street.[10]

Later political career

After the United States entered World War I in April 1917, the United States Railroad Administration was formed to run America’s transportation system during the war. McAdoo was appointed Director General of Railroads, a position he held until November 1918 when the armistice was declared, ending World War I.

After leaving the Wilson Cabinet, he focused on his law firm, which included serving as general counsel for the founders of United Artists. McAdoo ran twice for the Democratic nomination for President, losing to James M. Cox in 1920,[11] and to John W. Davis in 1924,[12] even though in both years he led on the first ballot.[13][14][15] A committed "Dry" with respect to Prohibition, McAdoo's first Presidential bid was scuttled by the New York state delegation and other Northern opponents of the banning of alcohol at the 1920 Democratic National Convention.[16] After defeating his chief rival for the nomination, Attorney General A. Mitchell Palmer, McAdoo finally lost the party nomination to dark horse candidate Governor James M. Cox of Ohio when the delegates decided in his favor on the 44th ballot.[17]

The 1924 nomination was notable due to the Ku Klux Klan endorsement of McAdoo; he did not condemn the endorsement. He served as Senator for California from 1933–1938. He was defeated for renomination to the Senate in 1938 by Sheridan H. Downey. McAdoo and Eleanor were divorced in 1934.[18] Two months after the decree was finalized in July 1935, the 71-year old married 26-year-old nurse Doris Isabel Cross.[19][20]

McAdoo took a payment of $25,000 from oil executive Edward Doheny in connection with the Teapot Dome scandal, but returned it once he discovered Doheny's links with Secretary of the Interior Albert Bacon Fall.[21]

Death and legacy

As treasury secretary, McAdoo's name is on the cornerstone of the U.S. Post Office (built 1919) in La Junta, Colorado.

McAdoo died of heart attack while traveling in Washington, D.C., after the third inauguration of Franklin D. Roosevelt,[22] and was buried in Arlington National Cemetery in Virginia.[23]

McAdoo was played by Vincent Price in the 1944 biopic Wilson. He is a significant character in the Glen David Gold novel Sunnyside, encouraging Charlie Chaplin to help with efforts to raise funds for World War I before advising him on the formation of United Artists.[24] McAdoo's former home in Chattanooga's Fort Wood neighborhood has been restored and is now a private residence.

The town of McAdoo in Dickens County, Texas, is named for him.[25] McAdoo's Seafood Company, a restaurant in New Braunfels, Texas, also bears his name.

McAdoo is quoted as having said, "It is impossible to defeat an ignorant man in argument." And in reference to Warren Harding, McAdoo said his public utterances were “an army of pompous phrases moving over the landscape in search of an idea.”[26]

Selected works

See also

Footnotes

  1. ↑ 1.0 1.1 McAdoo is variously differentiated from family members of the same name:
    • Dr. William Gibbs McAdoo (1820-1894) - sometimes called "I" or "Senior"
    • William Gibbs McAdoo (1863-1941) - sometimes called "II" or "Junior"
    • Lt. William Gibbs McAdoo, Jr. (1895-1960) - sometimes called "III"
  2. ↑ TSHA Online - Texas State Historical Association - Home at www.tshaonline.org
  3. ↑ Imjort, et al. (August 22, 1938). California's McAdoo . Time
  4. ↑ 4.0 4.1 4.2 East Tennessee Historical Society, Lucile Deaderick (ed.), Heart of the Valley: A History of Knoxville, Tennessee (Knoxville, Tenn.: East Tennessee Historical Society, 1976), pp. 216-228.
  5. ↑ Shook, Dale N. William G. McAdoo and the Development of National Economic Policy, 1913-1918. NY: Garland Publishing, 1987.
  6. ↑ Staff report (February 26, 1913). FOUR MEN CERTAIN IN WILSON CABINET; Bryan, McAdoo, Burleson, and Daniels Accept -- Walker for Attorney General. New York Times
  7. ↑ Staff report (March 6, 1913). CABINET MEMBERS SWORN.; McReynolds, Houston, and McAdoo Take Oath of Office . New York Times
  8. ↑ Staff report (May 8, 1914). ELEANOR WILSON WEDS W.G. M'ADOO; President's Youngest Daughter and Secretary of Treasury Married at White House. New York Times
  9. ↑ Staff report (December 23, 1946). M'ADOO'S DAUGHTER FOUND IN COMA, DIES. New York Times
  10. ↑ 10.0 10.1 10.2 Silber, William L., When Washington Shut Down Wall Street: The Great Financial Crisis of 1914 and the Origins of America's Monetary Supremacy, Princeton University Press, Princeton, N.J., 2007, ISBN 978-0-691-12747-7
  11. ↑ Bagby, Wesley M. “William Gibbs McAdoo and the 1920 Democratic Presidential Nomination.” East Tennessee Historical Society’s Publications 31 (1959): 43-58.
  12. ↑ Allen, Lee N. “The McAdoo Campaign for the Presidential Nomination in 1924.” Journal of Southern History 29 (May 1963): 211-28.
  13. ↑ Gelbart, Herbert A. “The Anti-McAdoo Movement of 1924.” Ph.D. dissertation, New York University, 1978.
  14. ↑ Stratton, David H. “Splattered with Oil: William G. McAdoo and the 1924 Democratic Presidential Nomination.” Southwestern Social Science Quarterly 44 (June 1963): 62-75.
  15. ↑ Prude, James C. “William Gibbs McAdoo and the Democratic National Convention of 1924.” Journal of Southern History 38 (November 1972): 621-28.
  16. ↑ Niall Palmer, The Twenties in America: Politics and History. Edinburgh, Scotland: Edinburgh University Press, 2006; pg. 23.
  17. ↑ Palmer, The Twenties in America, pg. 24.
  18. ↑ Staff report (July 18, 1934). Eleanor Wilson McAdoo Divorces Senator At Five-Minute Hearing on Incompatibility.New York Times
  19. ↑ Staff report (September 15, 1935). M'ADOO WEDS NURSE IN COLONIAL STYLE; Senator, 71, and Bride, 26, Take Vows in Flower-Decked Home of Son-in-Law.New York Times
  20. ↑ Staff report (September 23, 1935). No. 3 for McAdoo. Time
  21. ↑
  22. ↑ Staff report (February 2, 1941). William G. M'Adoo Dies in the Capital of a Heart Attack; Former Senator, Secretary of Treasury Under Wilson, Was Railways Director in War. Builder of Hudson Tubes. He Swung 1932 Nomination to Roosevelt -- Backed for the Presidency in '20 and '24. New York Times
  23. ↑ Staff report (February 10, 1941). Footnote to History. Times
  24. ↑ Gold, Glen David. 2009. Sunnyside. New York: Alfred A. Knopf. ISBN 978-0-307-27068-9
  25. ↑ TSHA Online - Texas State Historical Association - Home at www.tshaonline.org
  26. ↑ Jack Lynch, Guide to Grammar and Style. Retrieved: 5 June 2011.

Further reading

External links

Wikisource has original works written by or about:
William Gibbs McAdoo
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Political offices
Preceded by
Franklin MacVeagh		 U.S. Secretary of the Treasury
Served under: Woodrow Wilson
March 6, 1913 – December 15, 1918 		Succeeded by
Carter Glass
United States Senate
Preceded by
Samuel M. Shortridge		 United States Senators from California
March 4, 1933 – November 8, 1938 		Succeeded by
Thomas M. Storke
Awards and achievements
Preceded by
Anthony Fokker		 Cover of Time Magazine
7 January 1924 		Succeeded by
Bishop William Lawrence