born september 9, 1890
died december 18, 1977
salt lake city, utah
businessman, banker, chairman of the federal reserve
"He was more feared than loved; his economic titles made him a man whom people in the inter-mountain West addressed in tones of deference [respect]."
sidney hyman in marriner s. eccles: private entrepreneur and public servant
Marriner Eccles played a major role in President Franklin D. Roosevelt's (1882–1945; served 1933–45; see entry) administration. Eccles guided economic policy, particularly the efforts to reform the U.S. banking system and strengthen the role of the Federal Reserve System. Historians recognize Eccles as a keenly perceptive observer of economic issues and a fierce battler in representing his views. Eccles was one of the most influential players in restructuring the ailing American economy during the 1930s.
A shrewd young businessman
Marriner Stoddard Eccles was the oldest of nine children born to Ellen Stoddard in Logan, Utah. His father, David Eccles, had grown up in poverty in the slums of Glasgow, Scotland. David never attended school and worked for only pennies a day by age eight. In 1863 the Eccles family had converted to Mormonism, or the religion of the Church of Jesus Christ of Latter-day Saints. The family immigrated to the United States and to the state of Utah, the center of the Mormon Church. David Eccles was fourteen years of age and illiterate, but with a fresh beginning, he built a highly successful business career and amassed a fortune. The Mormon Church allowed polygamy (having more than one wife), and David Eccles had two wives, one of them Ellen Stoddard. The Eccles family became one of the wealthiest in Utah.
Marriner Eccles was raised in an atmosphere of thriftiness, honesty, self-reliance, hard work, and service to the Mormon Church. He attended a high school associated with Brigham Young College and then embarked on a required one-year Mormon mission. For his mission Eccles was sent to Scotland, and there he met his future wife, May Campbell "Maysie" Young. He and Maysie were married in 1913 and had four children.
David Eccles had died in 1912, leaving a fortune for Marriner to manage. At age twenty-two Marriner Eccles was a millionaire. After fierce legal battles with his half brothers, Marriner, the eldest son, assumed primary responsibility for his father's business enterprises, including various banks, a lumber company, and a sugar company. In 1916 he organized the Eccles Investment Company to help manage the various businesses, and he was the company's president. Eccles and a brother acquired more banks during the 1920s. By 1928 they had banks at seventeen locations in Utah, Wyoming, and Idaho. To manage the banks, they formed a holding company (a company that controls one or more other companies through stock ownership) called the First Security Corporation. Marriner Eccles was a shrewd and tough businessman. His banking and sugar interests grew until they were the largest such enterprises in the West. As director of the Utah Construction Company, he forged a partnership with other construction firms to form Six Companies, the lead construction firm for Hoover Dam on the Colorado River.
With the onset of the Great Depression in October 1929 and with bank failures occurring across the country, Eccles had to act decisively to save his banks. Eccles developed a strategy to maintain a public atmosphere of calm at his banks by having his employees interact with the depositors consistently in a calm manner. This strategy convinced depositors to retain their confidence in his banks. This was an amazing accomplishment at a time when the U.S. banking system seemed to be collapsing.
New Deal Banking Reform
The crash of the stock market in October 1929 brought tough times to the U.S. banking system. During the economic boom of the 1920s many banks flourished, with few regulations controlling the way they operated. But as the economy spiraled downward in late 1929 and early 1930, banks began to fail across the country. As bank failures mounted, public confidence in the banking system dramatically declined. If rumors indicated that a particular bank was weakening, depositors lined up to withdraw all their money. These mass withdrawals were called "bank runs." During the early 1930s bank decline, President Herbert Hoover (1874–1964; served 1929–33; see entry) called for Congress to investigate the U.S. banking system and consider revisions to U.S. banking laws. Congressional hearings on the matter of banking reform did not result in any helpful decisions, and Hoover resorted to other programs with little success. The number of bank failures increased steadily in 1931 and 1932. By March 2, 1933, twenty-one states had temporarily closed all their banks to prevent bank runs and additional bank failures. The U.S. banking system was paralyzed.
Resolving the banking crisis was the top priority facing newly inaugurated president Franklin Roosevelt on March 4. On that day Roosevelt declared a national banking holiday, temporarily closing all banks. The Emergency Banking Act was passed on March 9; it set standards for reopening the banks and providing loans to help banks. President Roosevelt delivered his first "fireside chat" over the radio waves on Sunday night, March 12, and restored the public's confidence in the banking system. He calmly and clearly explained what had been done to solve the problems. Most banks were reopened on March 13, and Americans responded by redepositing their money. The immediate crisis was resolved. Congress then passed the Banking Act of 1933, which included reform measures and created the Federal Deposit Insurance Corporation (FDIC), an agency that would insure depositors' accounts up to $2,500. The FDIC was further strengthened two years later in the Banking Act of 1935. By 1934 and 1935 the number of bank failures had significantly decreased. The three banking acts were monumental in restructuring the U.S. banking system.
A New Deal banker
Eccles's Mormon background influenced his approach in tackling the difficulties of the Depression. Mormon children were taught to work together to solve problems. Accordingly, Eccles believed significant cooperation between government agencies was going to be necessary to stimulate consumption of goods and make the economy healthy again. He believed the Depression was caused by economic policies and social customs that could not be overcome simply by individual efforts.
An unexpected major turning point in Eccles's life came in February 1933. Although he was practically unknown to politicians on the East Coast, Eccles was invited to testify before the Senate Finance Committee in Washington, D.C. More and more banks were failing, hunger was increasing, breadlines were growing, and farmers were losing their farms at an alarming rate. The committee, headed by a senator from Utah, was eager to determine the causes and solutions of the Depression. Invited to testify were financial and industrial leaders as well as representatives of farm and labor organizations. Many of the selected speakers were unable to offer much sound advice on how to end the Depression, but Eccles surprised the committee with a well-thought-out program. Eccles was one of the first to call for government deficit spending—that is, spending more money than is taken in—with the goal of stimulating the economy. He urged establishment of minimum wage laws, additional federal regulation of the agricultural industry, and greater Federal Reserve control over the U.S. banking system. (The Federal Reserve System is a government agency that oversees the nation's banking system, manages the country's supply of money and credit, and provides a broad range of services to commercial banks.) Coming from a highly successful businessman, these were radical suggestions.
Eccles's proposals caught the attention of president-elect Roosevelt and his advisers. They recruited Eccles to assist in the drafting of the 1933 Emergency Banking Act and to help design the Federal Deposit Insurance Corporation (an agency designed to protect depositors against loss of savings in the case of bank failure). They also asked Eccles to assist in creating the 1934 National Housing Act. Then in 1934 President Roosevelt appointed Eccles as assistant secretary of the treasury under Henry Morgenthau Jr. (1891–1967; see entry). Eccles held that position for only a few months before being nominated governor of the Federal Reserve Board in
November 1934. He would remain a member of the board for seventeen years. In 1935 Eccles promoted the Banking Act of 1935, which gave the Federal Reserve greater control over banking and separated it from the Treasury Department. When the economy, after appearing to be on the mend, again slipped downward in 1937, Roosevelt continued to seek out Eccles for advice.
After World War II (1939–45) Eccles was deeply concerned about the postwar economy and the rapid rise in the prices of consumer goods. He disagreed with Secretary of the Treasury Henry Morgenthau Jr. and others on how to control the economy. As a result, President Harry Truman (1884–1972; served 1945–53) chose not to reappoint Eccles as chairman of the board of governors of the Federal Reserve in 1948, though Eccles did stay on as assistant chairman until 1951.
In 1951 Eccles left public life in Washington, D.C., and returned to Utah, where he again took charge of the family businesses. By this time First Security Corporation had become one of the largest bank corporations in the West, and Eccles's sugar company was making $25 million a year producing sugar beets. Also in 1951 Eccles very quickly published his memoirs from his years in Washington, titled Beckoning Frontiers. In addition to his successful business ventures, Eccles made significant contributions to academic institutions. He established the Marriner S. Eccles Library of Political Economy at the University of Utah in Salt Lake City and the Marriner S. Eccles Professorship of Public and Private Management at Stanford University in California. Eccles died in Salt Lake City in 1977.
For More Information
eccles, marriner s. beckoning frontiers: public and personal recollections. new york, ny: knopf, 1951.
hyman, sidney. challenge and response: the first security corporation,first fifty years, 1928–1978. salt lake city, ut: graduate school of business, university of utah, 1978.
hyman, sidney. marriner s. eccles: private entrepreneur and public servant. stanford, ca: graduate school of business, stanford university, 1976.