America’s Long Struggle to Create a Central Bank

On this day, December 23, 1913, President Wilson entered the Oval Office. In a jubilant mood he went around the room to shake hands with key advisers and associates while giving a congratulatory nod to the influential Congressman from Virginia, Carter Glass.

Wilson proceeded to use the four golden pens on his desk to sign the Federal Reserve Act. Wilson and his group of partners in arms had achieved the landmark legislation of his domestic agenda: the creation of the Federal Reserve. This culminated from more than 120 years since Alexander Hamilton had attempted the grand experiment of a central bank that floundered through multiple presidential administrations. Arthur S. Link, a Wilson biographer, captured that this moment “Thus ended the long struggle for the greatest single piece of constructive legislation of the Wilson era and one of the most important domestic Acts in the nation’s history.’’

But what is the Federal Reserve? When was it created? Was Presidential Wilson the mastermind behind it or some other driving force?

Wilson’s domestic agenda centered on the New Freedom. One key pillar is banking reform. In the realm of economic policy, creating a central bank would be Wilson’s enduring legacy, following a century of struggle to create a permanent national bank by the nation’s founders. This battle of more than a century has sputtered and spin since Alexander Hamilton’s fight for a national bank under George Washington’s cabinet. Wilson did not command economic thought leadership that motivated him to advocate for a central bank.

The urgency was more in response to a confluence of factors, including the Panic of 1907 and public policy support from various parties from bankers to Congressional leaders. Wilson’s 1912 election ran his campaign on a progressive platform. He was also leveraging on his reformist agenda as a New Jersey governor. He pledged financial reform, but never explicitly mentioned establishing a central bank. Though he was a government cholar, Wilson didn’t have sufficient knowledge of banking. So he relied on two key advisers: Louis Brandeis, a Boston attorney serving as an outside adviser, and William McAdoo, Wilson’s Treasury Secretary.

While Louis Brandeis was Wilson’s most trusted voice from outside the White House bubble, like his predecessors, the president needed someone in his cabinet who could carry through monumental efforts like banking reform. He needed someone who had a business mindset but not beholden to bankers because that person would broker legislative proposals with repercussions for the broader economy. That is where William Gibbs McAdoo played an key role. Like Wilson, McAdoo had roots in the South. He began his law practice in Chattanooga, Tennessee and thereafter moved to New York to lead a railroad company. With an eye for politics, McAdoo became head of the Democratic National Committee in 1912, and gave support to candidate Wilson’s bid for the White House. As an independent lawyer-business leader who also had political ambitions, McAdoo would become Wilson’s U.S. Treasury Secretary and a close confidant. McAdoo was pivotal in the passage of the Federal Reserve Act and financing of World War I which Wilson reluctantly entered.

Congress, who represented various economic areas of the country, wanted regional banks to control the Federal Reserve System. That decentralized representation would be a counterbalance against Wall Street’s influence. Meanwhile, President Wilson wanted a centralized board to place a check on regional Federal Reserve banks, assuming those entities would be owned by private banks. William Jennings Bryan, a progressive voice in the Democratic party leadership, was committed to currency reform but opposed to a Wall Street take over. He was vocal during the 1912 Democratic convention in expressing support for Wilson. Because of his standing as a public leader with oratorical power, and a strong following in rural areas, Wilson appointed Bryan as his secretary of state. Bryan remarked, “The currency can be given all the elasticity it needs without increasing the privileges of the banks or the influence of Wall Street.” Wilson later would echo Bryan’s point, in saying “The greatest monopoly in this country is the money monopoly.”

The progressive wing was highly skeptical that the new system could be taken over by private banks, and Wall Street could undermine oversight on the banking system. Louis Brandeis in particular did not want bankers to be part of the Federal Reserve Board since as part of the banking system, they could not be trusted with objectivity and having public interest in financial stability and regulation

To reconcile the various perspectives on the central bank plan, President Wilson sought the advice of folks in Congress, relying on Representative Carter Glass of Virginia, who became chairman of the House Committee on Banking and Finance, and the committee’s adviser, H. Parker Willis, an economics professor from Washington and Lee. In order to get a viable version of the bill out of committee, Glass and Willis actively hashed out the pros and cons of the banking proposal.

During the negotiations, President Wilson consulted his trusted economic adviser, Brandeis, for direction. Congressman Bryan and Glass had valid concerns to which Brandeis came up with a middle ground. Brandeis told the president: “The conflict between the policies of the Administration and the desires of the financiers and of big business, is an irreconcilable one”. He warned that “Concessions to the big business interests must in the end prove futile.’’ To push forward, the proposal needs to satisfy both conservative and the progressive stakeholders. However, Brandeis voiced his concern that the proposed central banking system should not be owned by private banks but public. He argued that private interests would have undue influence over the system, and government oversight would be steered to benefit the industry while undermining public interest.

On June 17, President Wilson met with Congressman Glass, Secretary of the Treasury William G. McAdoo, and Senator Robert Owen of Oklahoma, chairman of the newly created Senate Banking and Currency Committee. The stakeholders landed a final proposal. There would be 12 regional banks around the country that are owned by private banks. In DC, a centralized Federal Reserve Board would be exclusively controlled by the government. For a sustainable currency, Federal Reserve Notes would be accepted as obligations of the United States. This avoids the pitfalls of the greenback currency that was issued on a temporary basis by Abraham Lincoln’s government to finance the Civil War. This compromise between the various views on central banking gave the proposal enough momentum to become a landmark legislation.


Heckscher, A. (1991). Woodrow Wilson: A Biography. Charles Scribner’s Sons.

Hofstadter, R. (1955). The Age of Reform. Vintage.

Link, A. S. (1956). Wilson: The New Freedom. Princeton University Press.


What is the President’s Brain Trust?

Do you ever wonder what the keys are to successful presidential leadership? Are you curious why past presidents like George Washington, Lincoln, and Franklin Delano Roosevelt were able to steer the country through calamities and turbulent periods? Historians might say these leaders had charisma, or an ability to manage a vast number of priorities, had a clear strategy, or perhaps they were born into the role. 

Just like any chief executive, however, the president’s success depends on a close group of advisers. From casual circles to trusted confidants, advisers are core parts of any White House to tackling an array of challenges, thinking through the fog of uncertainty, or spurring bold ideas. 

This is the very theme of my new book: The President’s Brain Trust. American presidents rely on their brain trust as a sounding board for their proposals; to get quick feedback and strategic advice when they make choices—from consequential to small. This tradition harks back to America’s founding fathers as they guided a new country that just emerged from the Revolutionary War. 

In this book, you’ll be able to see the evolution of the original cabinet from Alexander Hamilton’s grand economic plan under George Washington through Lincoln’s ambitious team who financed the civil war effort, and from FDR’s academic group of law school professors during the Great Depression to the network of intellectuals and Nobel Laureates under John F. Kennedy. 

I’ve taken copious notes of fascinating stories behind crucial periods in American history. Drawing on interviews and archival collections, I wanted to get a good look into executive leadership, the personalities and governing style of presidents, and their teams who influenced the decision-making process. 

Presidential leadership starts with the president and the team, none other than the president’s brain trust. 

A Christmas Carol – the Virtues and Vices of the Market Economy

This week in 1843 Charles Dickens published his book A Christmas Carol that would become a gift of joy and timeless tradition for society. But Dickens also imparted an incredibly powerful story of economic ideas that sheds light on severe economic problems while inspiring charity. Dickens invokes Adam Smith, the Scottish moral philosopher who is considered father of modern economics. In his landmark book, Inquiry into the Nature and Causes of the Wealth of Nations, Smith extolls the benefits of free markets as the foundation of capitalism, in which voluntary exchanges by members of society, motivated by the pursuit of individual self-interest, translates into collective good. Smith captured the economic interactions during the emerging industrial era at the time that still rings true:

“It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our necessities but of their advantages.” 

In the early scenes before his ghostly hauntings, Mr. Scrooge declined to donate to a charity cause. He even criticized for the overpopulation problem that resulted in people who take more from public resources than they contribute. In the Christmas Carol Scrooge in his callous way, said that: “If they would rather die, they had better do it, and decrease the surplus population.”

What Scrooge describes follows the lines of the population theory advanced by the economist Thomas Malthus. He used statistics to theorize that a growing population over time would drop off when society cannot supply sufficient food and basic necessities. Within time war, famine and natural disasters will flatten out population growth. This dire prediction gave economics its name as the dismal science. Personally Dickens grew up in a large family of eight children. Due to unfortunate circumstances, Dickens dropped out of school to start working to support his family.

In Dickens’ Christmas story, Mr. Scrooge is a cold workaholic banker. Yet, there’s little moral judgement on his profession nor does Dickens calls for the downfall of capitalism. Rather he calls out the greed and excesses of society, via the miserly, lonely banker, Mr. Scrooge. Like Adam Smith, Dickens notices a glimmer of hope in capitalism based on the virtues and sympathy that people have for one another.

Dickens has always been sensitive to the plight if the poor. An earlier event affected him deeply, According to reporting by the NY Times, in the fall of 1843, Dickens visited Samuel Starey’s Field Lane Ragged School, a school that provided education for slum children. When his father’s bankruptcy sent him to debtors’ prison, the twelve year old Dickens resorted to working long hours at a boot-blacking factory for no more than six shillings a week. Though he did help make ends meet for his family, he was scarred by the working conditions of the ragged children and men working warehouses and factories.

Dickens became a vocal critic of the widening wealth gap in Victorian England era, with a particular cry for the poor children who had to work at an early age. The tens of thousands of homeless children languished on the streets; life was brutish. Compared to his American counterparts, Dickens is slightly ahead in his progressive thinking, equivalent of a muckraker, a movement in America in the dawn of the 20th century that involved writers and journalists who published outrageous working conditions and economic injustices. Upton Sinclair, a novelist and journalist, wrote a harrowing account in The Jungle about labor conditions in the meat packing industry and slum urban dwellings with large immigrant demographics. Like Dickens in Britain, the American muckrakers shed light on deplorable economic issues which led to public policy changes and industry reforms. President Theodore Roosevelt and his White House team would take up the cause of economic justice during the Progressive era.  

The letters inscribed on his tomb reads: “He was a sympathiser to the poor, the suffering, and the oppressed; and by his death, one of England’s greatest writers is lost to the world.”

In honor of this holiday classic, here are a few of my favorite excerpts from A Christmas Carol: 

“Reflect upon your present blessings—of which every man has many—not on your past misfortunes, of which all men have some.”

″‘Business!’ cried the Ghost, wringing its hands again. ‘Mankind was my business. The common welfare was my business; charity, mercy, forbearance, and benevolence, were, all, my business. The dealings of my trade were but a drop of water in the comprehensive ocean of my business!‘”

“‘There are many things from which I might have derived good, by which I have not profited, I dare say,’ returned the nephew. ‘Christmas among the rest. . . . And therefore, uncle, though it has never put a scrap of gold or silver in my pocket, I believe that it has done me good, and will do me good; and I say, God bless it!‘”


Dickens, C. (1843). A Christmas Carol. In Prose. Being a Ghost Story of Christmas. Chapman & Hall.

Malthus, T. (1798). Principle of Population.

Mortimer, J. (1993, December 24). Poorhouses, Pamphlets and Marley’s Ghost. The New York Times.

Smith, A. (1776). An Inquiry into the Nature and Causes of the Wealth of Nations.

Pandemic in Peace Time vs. Public Health Crisis of World War I

COVID-19 is once in a century public health storm. The only comparable event is the Spanish Flu from a century ago that coincided with World War I. As the world enters a winter with a resurgence in cases, there are waves of record COVID cases popping up in major urban centers as society deals with the challenges of reopening the economy and fatigue from social distancing. If current trends persist, the coronavirus could take the worst toll on society for a public health crisis during peace time.

As of Q4 2020, there are 242 thousand deaths and 10.5 million COVID cases in the United States alone. A Stanford study at the end of Q3 2020 found that fewer than 1 in 10 Americans have antibodies to coronavirus. Based on this study of nationally representative analysis of virus antibodies, it means that at least 9 percent of the U.S. population been infected with COVID-19.

Cumulative deaths from COVID-19
Total Reported COVID-19 Cases

Major drivers of virus transmission are public events and spaces where people interact, such as restaurants, shops, places of worship and other social gatherings. Those infected persons can then transmit it to people in their family and close circles. Important to note is we’re living in peace time in 2020.

There is no major war like what we faced a century ago when there were massive movements of troops. What we do have today is constant movement of people, not so much for the battlefield, but traveling for business and leisure, in an interconnected world with opened borders marked by globalization. Our modern economic life is much busier, have diverse needs and encompasses human collaboration and interaction in connected spaces. It’s what the economist Alfred Marshall referred to as the “ordinary business of life.” But these are extraordinary times.

The Center for Disease and Control Prevention estimates that 675,000 people in the United States contracted the Spanish Flu during the 1918 pandemic (HN1N virus). It infected about 28 percent of all Americans.

The biggest driving factor for transmission were urban density and troops mobilizing for World War I. President Wilson faced the challenge of the deadly Spanish flu while committing U.S. forces to fight the war. Like any commander in chief, President Wilson did not make decision lightly (Wilson would later suffered from the flu during post-WWI peace. negotiations in Paris).

In April 1917 had officially entered World War I with 378,000 in the armed forces. It wasn’t long until the draft established 32 large recruiting camps, each housing 25,000-55,000. The first cases of the Spanish Flu were detected in the spring of 1918. There were a few reported severe cases and a handful of deaths in rural Haskell, Kansas. The nearest military training ground, Camp Funston in Fort Riley, Kansas, about 100 soldiers had contracted the flu. Within a week, that figure shot up to a few hundred. With the “war to end all wars” at stake, there was no turning back. In May 1918, hundreds of thousands of U.S. troops would be deployed to the war front in Europe.

Massive movement of troops would be a key contributor to the deadly spread of the Spanish Flu. There was no social distancing. But unlike today’s peace time, soldiers were not dining at restaurants or at their local pubs. They were largely ground troops fighting conventional warfare, situated in crowded quarters and foxholes. On the aggregate, the Spanish Flu is thought to claim more lives than troops dying from the battlefield.

The Journal of the American Medical Association posted the following eerie observation on December 28, 1918:

“The 1918 has gone: a year momentous as the termination of the most cruel war in the annals of the human race; a year which marked, the end at least for a time, of man’s destruction of man; unfortunately a year in which developed a most fatal infectious disease causing the death of hundreds of thousands of human beings. Medical science for four and one-half years devoted itself to putting men on the firing line and keeping them there. Now it must turn with its whole might to combating the greatest enemy of all–infectious disease” 

 Cots set up in gymnasium for flu patients
Military hospital for Spanish Flu patients