After President Woodrow Wilson signed the Federal Reserve Act into law on the evening of December 23, 1913, he told the men and women grouped around him, “I feel that I have had a part in completing a work which I think will be of lasting benefit to the business of the country.”
The twenty-eighth president’s efforts in creating the United States’ central bank, according to Wilson biographer Arthur S. Link, ranks as “one of the most important domestic Acts in the nation’s history.” Less than a year into his presidency, Wilson skillfully navigated the act through rocky political shoals, a triumph in legislative compromise.
Thomas Woodrow Wilson was born in Staunton, Virginia, on December 28, 1856, the son of a Presbyterian minister. Shortly after Wilson turned one, his family moved to Augusta, Georgia, and then to Columbia, South Carolina, where “Tommy,” as his family called him, completed his elementary education.
Wilson attended Davidson College in North Carolina for a brief time before transferring to the College of New Jersey (now Princeton University). After graduating with the class of 1879, he returned to his home state to attend law school at the University of Virginia and then earned his doctorate from Johns Hopkins University. He began his teaching career at Bryn Mawr College in Pennsylvania and became formally known as Woodrow.
In 1888, Wilson joined the faculty at Wesleyan University in Connecticut. Two years later, he accepted a professorship at Princeton, where he later became the president in 1902.
Wilson, a Democrat, was elected governor of New Jersey in 1910. The one-time political science professor and well-known reformist governor successfully sought the presidency in 1912, assuming office in 1913.
Wilson knew little about banking but made it his mission to tackle financial reform. A plan pushed by Sen. Nelson Aldrich, a Rhode Island Republican, called for one central institution with branches across the country that would be controlled by member banks. Rep. Carter Glass, a Lynchburg Democrat who chaired the House Committee on Banking and Finance, and H. Parker Willis, an economist at Washington & Lee University in Lexington, Virginia, called for a decentralized system with regional Reserve Banks across the country. Wilson advocated for a central public agency, a Federal Reserve Board, a “capstone to be placed upon the structure.”
In December 1913, Congress ultimately voted to establish a decentralized, central bank of twelve regional Reserve Banks and a Federal Reserve Board that balanced private and public interests. The twelve banks opened for business eleven months later on November 16, 1914.
Meanwhile, World War I had erupted in Europe that August. After his re-election in 1916, Wilson could no longer keep America neutral in the conflict and on April 6, 1917, Congress declared war on Germany. Wilson is also remembered for his support of the Clayton Antitrust Act and the Federal Trade Commission Act, his “Fourteen Points” statement regarding the future of the postwar world, particularly Europe, and his attempt to establish the League of Nations.
Wilson married Ellen Louise Axson in June 1885, and the couple had three children. Ellen died in 1914, and Wilson remarried Edith Bolling Galt in December 1915. Wilson suffered a stroke in 1919 and never fully recovered. In 1921, after his term ended, Wilson and Edith Bolling Galt retired to Washington, DC, where he died in 1924, at the age of sixty-seven. He is buried in the Washington National Cathedral.
Written by the Federal Reserve Bank of Richmond. See disclaimer.