The 1900's-2000's: 11 12 13 14 15 16 17 18 19 20 21 22 < previous next >
The 1900's

The Panic of 1893 was the latest of a series of financial panics that had marred the growth of the American economy since the Civil War, many of which could be traced to the weak banking and monetary system. That was why the paper did not oppose Teddy Roosevelt's reforming antitrust crusade when he assumed the presidency upon the assassination of President McKinley in 1906.

During these turbulent economic times, the JoC hired a brilliant young man with a Ph.D. in economics, who was to have a profound impact on the newspaper, as well as on the nation's banking laws. H. Parker Willis arrived in 1902 as the JoC's correspondent in Washington, which had become an increasingly important source of business news due to the growth in rail rate regulation and antitrust activities.

The double life of H. Parker Willis

H. Parker Willis stayed busy. During his 29 years at The Journal of Commerce, there was rarely a moment when he was not also involved in shaping U.S. economic and banking institutions. The results of his efforts are still seen today.

Multidimensional JoC editor had a key role in creation of the Federal Reserve System

Willis' extracurricular work while a JoC employee would lead to the creation of the Philippine Central Bank and later the Philippine American Chamber of Commerce. Most important, his research and his brilliant insights led to the creation of the U.S. Federal Reserve System.

When he joined the JoC in 1902 at the age of 28, he had already been a star professor of economics and political science at Washington and Lee University. He took an academic leave to travel to the Far East in 1903-05 as a correspondent for the JoC and the Engineering and Mining Journal.

In between his dispatches, Willis began a study that led to the creation of the Philippine National Bank. Willis would become the first head of the bank, which served as the nation's central bank, while still on the staff of the JoC.

But he was just warming up. Returning to the U.S. in the fall of 1906, he became the first head of Washington and Lee's School of Commerce, while still writing for the JoC. He also became the economic adviser to Rep. Carter Glass, D-Va. His work for the JoC and Glass took him to the nation's capital so frequently that the university's president complained, resulting in Willis' resignation. The school's student body sent the university's board a vigorous declaration of support for the popular professor.

H. Parker Willis

Willis continued to write for the JoC, and in 1912 he became executive director of the National Monetary Commission. The commission had been created at the behest of Glass, who had been elected to the Senate. Under Willis' direction, the commission issued a study recommending creation of a U.S. central bank. After Woodrow Wilson was elected president, he asked Glass to begin working on legislation.

Together with Glass, Willis drafted the enabling legislation. The measure was opposed by big banks, which wanted no central authority over them. Willis came up with a solution - a Federal Reserve System consisting of regional Federal Reserve banks owned by member banks but run as "corporations operated for public service."

The regional Fed directors would come from banking and industry, along with citizens appointed by the Federal Reserve Board in Washington. The president would appoint the Fed's seven-member board of governors, with the Treasury secretary and comptroller of the currency as ex-officio members.

"Willis took the best of the existing proposals, together with a brilliant balance of public-private ownership and leadership, to fashion a unique central banking institution," said Robert Bremner, who is writing a biography of William McChesney Martin Jr., the Fed's chairman from 1951 to 1970.

Another of Willis' innovations was to have the 12 regional banks serve as clearinghouses for checks written by the depositors of member banks. Willis reasoned that this would give the Fed a practical purpose, in addition to replacing the patchwork of inefficient regional systems with a unified national framework for check collection.

Without check-clearing duties, he later said, the Fed banks would have become "merely the holders of dead balances carried for the member banks without any service for them; and since the business public abhors any idle or unnecessary would not submit long to the needless burden created by such emergency institutions designed to put out financial fire."

After the Federal Reserve Act was passed in 1913, Willis became the Federal Reserve Board's first secretary from 1914-18. He became its director of research from 1918-22, which meant he was chief economist, although the position was not called that yet. "These two staff positions first held by Dr. Willis remain the most influential at the Fed today," Bremner said.

All through this time, Willis was writing for the JoC as its Washington economic correspondent. As if that wasn't enough, he also became a professor of economics at George Washington University and later dean of its college of political science. He also lectured at Columbia University and became a full professor of economics there in 1919.

Willis also became editor- in-chief of the JoC in 1919. He steered the paper's coverage in a new direction. With his profound grounding in economics and political science, he believed the paper should place the coverage of business and commerce within the context of economics and government.

As he stated in the paper's centennial issue in 1927: "Business (and) economic life as a whole is a unit essentially and hence demands a unified treatment, which is impossible where attention is solely concentrated on finance or upon some specialized branch of industry."

It was this vision of business and economic coverage that would differentiate the JoC from other business papers with its broad coverage of the nation's business activities within the context of what was going on in the economy.

Willis resigned as editor of the JoC in 1931, but he continued to teach at Columbia. He wrote a series of five books on his passion - banking and monetary policy. They were The Federal Reserve System (1923), Federal Reserve Banking Practice (1926), The Theory and Practice of Central Banking (1936), The Banking Situation, Post-War Problems and Developments (1934), and The Federal Funds Market (republished in 1970).

Willis' contributions to economic and monetary theory and policy, the establishment of the Fed and the growth of the JoC are still remembered. In a speech at Washington and Lee last March, Roger W. Ferguson Jr., the Fed's current vice chairman, paid tribute to Willis as "a leader in teaching economics and political science and a major contributor to the establishment of the Federal Reserve."

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