William Gibbs McAdoo | |
|---|---|
 Portrait byHarris & Ewing, 1914 | |
| United States Senator fromCalifornia | |
| In office March 4, 1933 – November 8, 1938 | |
| Preceded by | Samuel M. Shortridge |
| Succeeded by | Thomas M. Storke |
| 46thUnited States Secretary of the Treasury | |
| In office March 6, 1913 – December 15, 1918 | |
| President | Woodrow Wilson |
| Preceded by | Franklin MacVeagh |
| Succeeded by | Carter Glass |
| Director General of Railroads | |
| In office December 28, 1917 – November 18, 1918 | |
| President | Woodrow Wilson |
| Preceded by | Position established |
| Succeeded by | Walker Hines |
| Personal details | |
| Born | William Gibbs McAdoo Jr. (1863-10-31)October 31, 1863 |
| Died | February 1, 1941(1941-02-01) (aged 77) Washington, D.C., U.S. |
| Resting place | Arlington National Cemetery |
| Political party | Democratic |
| Spouses | |
| Children | 9 |
| Education | University of Tennessee, Knoxville (BA) |
| Signature | .jpg) |
Gibbs describing government plans to reduce taxes followingWorld War I Recorded December 1, 1919 | |
William Gibbs McAdoo Jr.[1]/ˈmækəˌduː/ (October 31, 1863 – February 1, 1941) was an American lawyer and statesman. McAdoo was a leader of theProgressive movement and played a major role in the administration of his father-in-law, PresidentWoodrow Wilson. A member of theDemocratic Party, he also representedCalifornia in theUnited States Senate.
Born inMarietta, Georgia, McAdoo moved toKnoxville, Tennessee, in his youth and graduated from theUniversity of Tennessee. He established a legal practice inChattanooga, Tennessee, before moving to New York City in 1892. He gained fame as the president of theHudson and Manhattan Railroad Company and served as the vice chairman of theDemocratic National Committee. McAdoo worked on Wilson's successful1912 presidential campaign and served as theUnited States Secretary of the Treasury from 1913 to 1918. He married Wilson's daughter,Eleanor, in 1914. McAdoo presided over the establishment of theFederal Reserve System and helped prevent an economic crisis after the outbreak of World War I. After the U.S. entered the war, McAdoo also served as theDirector General of Railroads. McAdoo left Wilson's Cabinet in 1919, co-founding the law firm ofMcAdoo, Cotton & Franklin.
McAdoo sought the Democratic presidential nomination at the1920 Democratic National Convention but was opposed by his father-in-law, PresidentWoodrow Wilson, who hoped to be nominated for a third term.[2] In 1922, McAdoo left his law firm and moved to California. He sought the Democratic presidential nomination again in 1924, but the1924 Democratic National Convention nominatedJohn W. Davis. He was elected to the Senate in 1932 but was defeated in his bid for a second term. McAdoo died of a heart attack in 1941 while traveling from thethird inauguration of Franklin D. Roosevelt.
McAdoo was born during the middle of the Civil War in the historicWilliam Gibbs McAdoo House inMarietta, Georgia. He was the son of author Mary Faith Floyd (1832–1913) and attorney William Gibbs McAdoo (1820–1894). His uncle,John David McAdoo, was a Confederate general and a justice of the Texas Supreme Court.[3] McAdoo attended rural schools until his family moved toKnoxville, Tennessee, in 1877, when his father became a professor at theUniversity of Tennessee.
He graduated from the University of Tennessee and was a member of the Lambda chapter ofKappa Sigma fraternity. He was appointed deputy clerk of theUnited 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 McAdoo 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.[4][5] In 1892 he moved to New York City, where he met Francis R. Pemberton, son of the Confederate GeneralJohn C. Pemberton. They formed a firm, Pemberton and McAdoo, to sellinvestment 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 struggle with Ohio businessman C.C. Howell over control of the city's streetcar system, culminating in a bizarre incident known as theBattle of Depot Street.[5] Litigation in the aftermath of this incident favored Howell, and McAdoo abandoned his streetcar endeavors in 1897 and returned to New York.[5]
Around 1900, McAdoo took on the leadership of a project to build theUptown Hudson Tubes, a pair of railroad tunnels under theHudson River connectingManhattan withNew Jersey. A tunnel had been partially constructed during the 1880s byDewitt Clinton Haskin.[6] With McAdoo as president of theHudson and Manhattan Railroad Company, two passenger tubes were completed and opened in 1908.[7] The popular McAdoo told the press that his motto was "Let the Public be Pleased."[6] The tunnels are now part of thePATH train system.[8] As part of publicizing the tunnels, McAdoo gave tours to political leaders and foreign dignitaries.[8] He met Woodrow Wilson in 1910, near the end of Wilson's tenure as the president of Princeton University.[8] McAdoo campaigned for Wilson when Wilson ran for governor of New Jersey later that year.[8] He went on to serve as vice chair of the Democratic National Committee and co-chair of Wilson's successful 1912 presidential campaign.[8] McAdoo's wife died in February 1912.[8]
After taking office as president, Wilson appointed McAdoo secretary of the Treasury, a post McAdoo held from 1913 to 1918.[9][10][11][12]
He married the president's daughterEleanor Randolph Wilson at theWhite House on May 7, 1914.[13] They had two daughters, Ellen Wilson McAdoo (1915–1946) and Mary Faith McAdoo (1920–1988). Ellen married twice and had two children.[14] Mary married three times, but had no children. McAdoo's second marriage ended in divorce in July 1935, and he married a third time at nearly 72, to 26 year old nurse Doris Isabel Cross (1909–2005), in September 1935.
McAdoo offered to resign after his wedding, but President Wilson urged him to complete his work of turning theFederal 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, in July and August 1914.[15] At the time, the United States 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. 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 continued, these actions 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. Investors might then have been able to buy American goods and raw materials (for their war effort) at greatly depressed prices, which Americans would have had to accept in order to restart the economy from a consciously (albeit inadvertently) caused depression.
McAdoo's actions, then, were both bold and outrageous: keeping the U.S. currency on thegold standard, he arranged the closing of theNew York Stock Exchange for an unprecedented four months to prevent Europeans from selling American securities and exchanging the proceeds for dollars and gold.
Investors in the warring countries thus had no access to their holdings of U.S. financial assets at the outset of the war. 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.
EconomistWilliam L. Silber wrote that the wisdom and historical impact of this action cannot be overemphasized.[15] McAdoo's bold stroke, Silber writes, averted an immediate panic and collapse of the American financial and stock markets. It also laid the groundwork for a 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.
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 U.S. industry swiftly built up to the scale needed to meet the allied war needs. The managed liquidation of foreign holdings of U.S. 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 thePanic of 1907, McAdoo also invoked the emergency-currency provisions of the 1908Aldrich–Vreeland Act. Silber credits his actions for having turned America into a world financial power, in his bookWhen Washington Shut Down Wall Street.[15]
Like President Wilson, McAdoo was a segregationist. During his tenure as Secretary, he broke with long-standing policy and ordered implementation ofJim Crow in all Treasury facilities, even in the north where they had previously not existed.[16] McAdoo told reporterOswald Garrison Villard thatracial segregation was needed in the Treasury to prevent friction.[17]
After the United States entered World War I in April 1917, theUnited States Railroad Administration was formed to run America's transportation system during the war. McAdoo was appointedDirector General of Railroads, a position he held until the armistice in November 1918.
In March 1919, after leaving the Wilson cabinet, McAdoo co-founded the law firm McAdoo, Cotton & Franklin, now known aswhite shoe firmCahill Gordon & Reindel. His law firm served as general counsel for the founders ofUnited Artists, with McAdoo taking a 20 percent stake in thecommon shares of the joint venture, while foundersMary Pickford,Charlie Chaplin,Douglas Fairbanks andD. W. Griffith each held a 25 percent stake in thepreferred shares and a 20 percent stake of the common shares. He left the firm in 1922 and moved to California to concentrate on his political career.
McAdoo ran twice for theDemocratic nomination for president, losing toJames M. Cox in 1920,[18] and toJohn W. Davis in1924,[19] even though in both years he led on the first ballot.[20][21][22] While campaigning in the run-up to the 1920 presidential election, McAdoo voiced his support for such measures as injury compensation, unemployment insurance, and the eight-hour workday, while also expressing his support for the idea of permanent federal legislation in the labor sphere, especially concerning unemployment compensation and a minimum wage.[23]
A committedProhibition supporter, McAdoo's first presidential bid was scuttled by the New York state delegation and other Northern opponents of the banning of alcohol at the1920 Democratic National Convention.[24] After defeating his chief rival for the nomination, Attorney GeneralA. Mitchell Palmer, McAdoo finally lost the party nomination todark horse candidate GovernorJames M. Cox ofOhio when the delegates decided in his favor on the 44th ballot.[25]
McAdoo was again a candidate for the Democratic presidential nomination in 1924. Widely regarded as the front-runner in 1923, McAdoo's candidacy was badly hurt by the revelation that he had previously accepted a $25,000 contribution fromEdward L. Doheny, an oil tycoon implicated in 1922 in theTeapot Dome scandal.[26] McAdoo had returned the normal-course contribution once he learned of Doheny's possible bribes toSecretary of the InteriorAlbert Fall to get oil leases.[27] At the1924 Democratic National Convention, McAdoo received the support of the friends of theKu Klux Klan. He refused to repudiate the KKK causing the Catholic vote to turn against him. McAdoo defeatedOscar Underwood, who was an opponent of the Ku Klux Klan andProhibition, in the Georgia primary and split the Alabama delegation.[28][29] McAdoo led after the first ballot of the convention, with his greatest challenger beingNew York GovernorAl Smith. After dozens of ballots, and numerous brawls between McAdoo's and Smith's supporters,[30] compromise candidateJohn W. Davis won the nomination on the 103rd ballot.
In February 1923, McAdoo and a consortium of eastern investors attempted to establish the first city bus service inLos Angeles. The Peoples' Motor Bus Company was to cover 60 miles ofLos Angeles streets withdouble-decker buses. The scheme was defeated by a public referendum in favor of a competing proposal by thePacific Electric Railway andLos Angeles Railway.[31]
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From 1932 to 1940, McAdoo served as a member of theDemocratic National Committee. At the1932 Democratic National Convention, he played an important role in switching California's support from presidential candidateJohn Nance Garner toFranklin D. Roosevelt, which aided Roosevelt in obtaining the nomination.In 1932, he was the successful Democratic nominee for a seat in theUnited States Senate. He won the Senate seat in a three-way race with 43% of the vote; RepublicanTallant Tubbs won 31%, and Prohibitionist"Fighting Bob" Shuler won 26%. He served from 1933 until November 1938; after losing renomination toSheridan Downey, he resigned a few weeks before the completion of his term. In the Senate, McAdoo was one of the authors of the1933 Banking Act. He also served as chairman of theCommittee on Patents from 1934 to 1938. He voted to invoke cloture on theAnti-Lynching Bill of 1937, but the bill failed to receive enough votes for cloture to override a filibuster by Southern Democrats.[32] In 1937, McAdoo introduced a successful bill that enabled the federal government to purchase a large timber holding from theYosemite Lumber Company and bring it within the boundaries ofYosemite National Park.[33]
McAdoo's wife filed for divorce in 1934.[34] Two months after their decree was finalized in July 1935, the 71-year-old McAdoo married Doris Isabel Cross, a 26-year-old nurse.[35][36]
McAdoo died on February 1, 1941, of aheart attack while traveling in Washington, D.C., after thethird inauguration of Franklin D. Roosevelt,[37] and was buried inArlington National Cemetery inVirginia.[38][39]
McAdoo was enormously appealing with his handsome looks, obvious enthusiasm and boundless energy. He had an uncomplex personality that was always persuasive, optimistic and self-assured. What was lacking was depth or commitment to deep principles.
He excelled first as a maverick promoter and businessman who supported antitrust measures that were favored by the progressive movement. The World War enormously enlarged his scope of Treasury Department activities, giving him a strong voice in all major foreign and domestic policies, with major impact on the entire economy.
In the 1920s, as his Democratic Party polarized, he took the side of rural America, especially the South, as opposed to Al Smith's big cities. He never supported the Ku Klux Klan, but on the other hand refused to denounce it when so many loyal Democrats belonged. McAdoo and Smith stalemated each other in the fierce competition for the 1924 presidential nomination.
In 1932, he helped stop Al Smith and instead promoted Franklin Roosevelt for the nomination. He supported the New Deal, but he was no longer comfortable with the growing radicalism in California in the mid-1930s, and was defeated for reelection in 1938.[40]
McAdoo was played byVincent Price in the 1944biopicWilson. He is a significant character in theGlen David Gold novelSunnyside, encouragingCharlie Chaplin to help with efforts to raise funds for World War I before advising him on the formation ofUnited Artists.[41] McAdoo's former home inChattanooga'sFort Wood neighborhood has been restored and is now a private residence.
The town ofMcAdoo inDickens County, Texas, is named for him.[42] McAdoo's Seafood Company, a restaurant inNew Braunfels, Texas, also bears his name.
McAdoo is quoted as having said, "It is impossible to defeat an ignorant man in an argument."[43] And in reference toWarren Harding, McAdoo said his public utterances were "an army of pompous phrases moving over the landscape in search of an idea."[44]
The appointment of Mr. William G. McAdoo as Secretary of the Treasury of the United States necessitated his resignation as a Director and President ofthis Company. At a meeting of the Board of Directors on March 6th, Mr. McAdoo's resignation was accepted with great regret
| Political offices | ||
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| Preceded by | United States Secretary of the Treasury 1913–1918 | Succeeded by |
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| Preceded by | Cover ofTime 7 January 1924 | Succeeded by |
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| Preceded by | Democratic nominee forU.S. Senator fromCalifornia (Class 3) 1932 | Succeeded by |
| U.S. Senate | ||
| Preceded by | U.S. Senator (Class 3) from California 1933–1938 Served alongside:Hiram Johnson | Succeeded by |
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