Frank A. Vanderlip was a leading member of the US banking industry at the beginning of the twentieth century and worked closely with Sen. Nelson Aldrich to develop a proposal for a new central banking system. Many of this plan’s provisions were eventually included in the Federal Reserve Act of 1913.
Vanderlip was born near Aurora, Illinois, in 1864. His father died when he was a young teenager, and Vanderlip eventually took a job running a lathe in a machine shop to help support his mother and two siblings. He earned seventy-five cents for a ten-hour day and saved enough money to send himself to college for a year, but then he had to return home to work. He left the machine shop for a job at Aurora’s newspaper and within a few years had moved to Chicago, where he made a name for himself as a financial reporter at the Chicago Tribune. While working as a reporter, he continued the education he’d had to postpone as a young man, taking classes in economics, finance, and history at the University of Chicago.
When the Chicago banker Lyman Gage was appointed Treasury secretary in 1897, he asked Vanderlip to accompany him to Washington as his private secretary. Within months, Vanderlip had been promoted to assistant secretary of the Treasury, and his successful handling of the sale of $1.4 billion in Spanish-American War bonds drew the attention of Wall Street.
Vanderlip left Treasury for National City Bank (today’s Citi) in 1901. As a vice president, one of his first initiatives made National City a leading correspondent for other commercial banks in government bond markets. His most influential action established National City’s role as a leader in financing American international trade. The success of these initiatives led to his appointment as National City’s president in 1909.
Vanderlip was active in efforts to reform the country’s banking and currency systems and was an early advocate of establishing a central bank. In 1910, he was one of a few men invited by Aldrich and Henry Davison, a partner at J.P. Morgan, to attend a secret meeting on Jekyll Island, Georgia. The other attendees included A. Piatt Andrew, assistant secretary of the Treasury; Paul Warburg, a Wall Street banker; and Andrew Shelton, Aldrich’s private secretary. At this meeting, which lasted about a week, the men synthesized two years of research by the National Monetary Commission and developed a central banking bill to present to Congress. This bill failed, but it laid the groundwork for the Federal Reserve Act, which became law in 1913.
Vanderlip’s interests extended well beyond banking. He established the first school in the United States to adopt the Montessori Method of kindergarten instruction -- and provided scholarships for children of exceptional ability who were unable to afford the tuition -- and was a trustee for the Carnegie Foundation for the Advancement of Teaching. After retiring from National City Bank, he embarked on a quest to revive the small town of Sparta, in upstate New York. He bought up all twenty-nine properties and hired the same architectural firm that designed the Empire State Building to restore and redesign the town, which was soon populated by schoolteachers and artists. Vanderlip died of an intestinal infection in 1937 and was survived by his wife, Narcissa, with whom he had six children.
Forbes, B.C. “Frank A. Vanderlip” in Men Who Are Making America. New York: B.C. Forbes Publishing Co. Inc,. 1917. pp. 389-397.
Mack, Vicki. Frank A. Vanderlip: The Banker Who Changed America. Palos Verdes Estates, CA: Pinale Press, 2013.
Mayer, Robert Stanley. The Influence of Frank A. Vanderlip and the National City Bank on American Commerce and Foreign Policy 1910-1920. New York: Garland Publishing, Inc., 1937.
Vanderlip, Frank A., and Boyden Sparkes. From Farm Boy to Financier. New York: D. Appleton-Century Company, 1935.
Written by the Federal Reserve Bank of Richmond. See disclaimer.