Utah central banker Marriner Eccles fulfilled Hamilton’s vision

By A. Scott Anderson

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Deseret News

FILE: A statue of Marriner S. Eccles is unveiled Tuesday, Sept. 16, 2014, during a ceremony at the Utah State Capitol.

Who would have thought that the desire of one of America’s Founding Fathers to establish a central bank would be the theme of a block-buster Broadway musical? But it is. By any measure, "Hamilton" is the hit of the decade, so far grossing $80 million and winning a bevy of Tony awards. Critics are saying "Hamilton’s" rap music and fresh approach are breathing new life into Broadway musicals, attracting a whole new generation of theatergoers. Many Utahns are excited that the "Hamilton" touring company will be coming to Salt Lake City in 2018.
While Alexander Hamilton is receiving deserved acclaim some 212 years after his death, less well-known is the fact that his central bank legacy was strengthened and institutionalized by Marriner S. Eccles, a Utah banking giant — the architect of the modern Federal Reserve System.

John Adams described Hamilton as “the bastard brat of a Scottish peddler.” But acclaimed historian David McCullough wrote, “Alexander Hamilton was one of the most brilliant men of his brilliant time, and one of the most fascinating figures in all of American history. His rocketing life story is utterly amazing. His importance to the founding of the new nation, and thus the whole course of America, can hardly be overstated.”
As portrayed in the musical, Hamilton’s life ended in a duel with Aaron Burr on July 11, 1804, in New Jersey. But the real story of Hamilton was his advocacy for a powerful central government backed financially by an independent central bank. As Thomas Jefferson rapped at the end of the play, “I’ll give him this: his financial system is a work of genius. I couldn’t undo it if I tried. And I tried.”
The central bank established by Hamilton eventually failed, but the concept was sound. In 1913, partly in response to the early 1900s financial panics, Congress created the Federal Reserve System, known today as the Fed, and gave it control of the monetary system.
During the Great Depression, the Fed’s role was strengthened by Marriner Eccles and President Franklin D. Roosevelt. Eccles built significantly on Hamilton’s legacy. Under his direction, the Fed became responsible for managing inflation and working toward full employment, among other things.
Born in Logan in 1890, Eccles worked at his father's lumber mills and then attended Brigham Young College in Logan, according to “Utah History To Go.” After serving an LDS mission in Scotland, he managed various businesses at different times, serving as president of First Savings Bank, Sego Milk Products, Utah Construction Co., Stoddard Lumber, and First Security Corp.
Amidst the stock market collapse and the beginning of the Great Depression, Eccles was noticed by President Roosevelt’s “brain trust.” He was invited to Washington, where he testified before the Senate Finance Committee, advocating many reforms that would become cornerstones of the New Deal. He proposed public works to create jobs, direct relief for the needy, a minimum wage, unemployment insurance and old age pensions.
He was appointed assistant Treasury secretary and soon thereafter, in 1934, was appointed Federal Reserve Board chairman. Major bank executives initially underestimated him, but Eccles' diplomatic skills and expertise made him a very influential policymaker. He wrote the Banking Act of 1935 and restructured the Federal Reserve System. His remarkable career was immortalized in 1982 when Congress renamed the Federal Reserve Building in Washington, D.C., the Marriner S. Eccles Federal Reserve Board Building.
Perhaps another Broadway play titled “Eccles” would be a big hit.

Who knew that goats could save taxpayers five to ten thousand dollars a year?

Today, the Fed’s role is under scrutiny. Some conservatives in Congress want to curtail the Fed’s power and independence and bring it under congressional control. Others believe it is very important to preserve the Fed’s independence from politics.
3 comments on this story Economists, banks and businesses constantly monitor the Fed as it attempts to balance inflation and employment by controlling interest rates. The up-and-down economy makes that job difficult. Recent good employment numbers may — or may not — give the Fed the ammunition it needs to raise interest rates at its September meeting. As the Fed analyzes economic data and considers rate changes, businesses are doing what Hamilton advised in the play: “Just you wait. Just you wait.”