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History of the Treasury
Secretaries of the Treasury
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William G. McAdoo
(1913 - 1918)
Seeking a Secretary of the Treasury with financial experience
who was not too closely identified with Wall Street, President Woodrow Wilson
found lawyer-businessman William G. McAdoo (1863-1941). The pressing issue
of the era was bank reform,  which had been gaining attention since the
Panic of 1907, and it was clear that some kind of central banking system
was needed. There were two problems with the existing system, it was inelastic,
or unable to expand and contract the money supply with the needs of the
nation, and it was decentralized, resulting, at times, in an uneven distribution
of currency throughout the country.
McAdoo opposed Senator Nelson W. Aldridge's proposed
system of private reserve banks under control of the banking industry
and advocated instead a central bank operated out of the Treasury. The
Federal Reserve Act (1913) was a compromise, creating a centralized banking
system controlled by an independent federal board with the power to perform
such central banking functions as determining and harmonizing discount
rates defining eligible paper, and controlling the issue of notes. The
income tax, declared unconstitutional in 1895, was made constitutional
by the Sixteenth Amendment and reintroduced permanently in 1913 to provide
revenue for the fast-growing nation. McAdoo also successfully financed
World War I by awakening a patriotic spirit in the American people, who
were unused to saving through the purchase of government bonds, and floating
four Liberty Loans to pay for the war. He resigned in 1918 to resume the
practice of law in New York.
About the Artist
J. Campbell Phillips was born in New York City in
1873 and had his early art training at the Metropolitan Museum of Art
School, the Art Students League, and in the studio of William Merrit Chase.
In 1892 he exhibited an oil painting at the National Academy of Design,
where subsequently many of his works were shown. He was the recipient
of many awards, including the Isidor Portrait Prize, and won a competition
to paint the portrait of Mayor William Gaynor for city hall, New York
in 1914. His portrait of William G. McAdoo was painted from life in 1919,
just after McAdoo retired as Secretary of the Treasury.
Office of the Curator
All rights reserved. 2001
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