So I’m basically minding my own business, doing history down at the Little White School Museum, when my friend, Vicki Mack, calls and wonders if she can stop by and film a segment for a documentary she’s working on.
I met Vicki, a professional photographer from Palos Verde, Calif., a few years ago when she working on a biography of journalist, financier, government official, and real estate developer Frank Vanderlip. The result, Frank A. Vanderlip: The Banker Who Changed America, was published just a year ago, to pretty good reviews.
And what did Oswego have to do with Frank Vanderlip? Well, he was born in Aurora, but the family moved to a farm just outside Oswego when he was very young. He grew up there and attended what became known as the Old Stone School, part of the number of students educated by Christopher C. Duffy, then the school’s principal and superintendent. Vanderlip’s father died in 1878, leaving the 14 year-old as the man of the household. Unfortunately, the country was still reeling from the devastating effects of the Panic of 1873—the most severe depression the nation would suffer until the 1930s—and Frank’s mother (a city girl raised in Aurora) simply couldn’t cope. The family lost the farm and their possessions, all of which were auctioned to the highest bidders.
The family moved back to Aurora where Frank parlayed his intelligence and hard-working spirit into first a job with a local paper, then moving up to a business reporter at the Chicago Tribune, then to the business editor’s position at the Trib, before heading off with one of his mentors to Washington, D.C. to eventually become an assistant treasury secretary. That led to a job in banking and the eventual presidency of the National City Bank in New York—today’s Citibank—a job that put him in a position to have a major impact on creating better methods for the nation to cope with periodic financial panics and depressions. And that led to the formation of the Federal Reserve System.
Not too bad for a one-time Oswego farm kid.
Call me cynical if you like, but after 30 years in the news biz, hearing about a possible documentary about Vanderlip didn’t really trip any triggers. I’ve seen too many big ideas inflate and deflate over the years. But then in late September, I got another call from Vicki announcing she and a few others would be in the Fox Valley filming and would I be up for a Sunday supper at the Two Brother Round House in Aurora. Old historian’s rule: Never turn down a free meal. So I asked my wife if she was up for a good, free meal, which she was. I like the Roundhouse; my grandfather and great-grandfather worked in the adjacent Chicago, Burlington & Quincy Shops, so it’s got a sort of homey feeling for me.
During the meal, the shooting schedule was nailed down: Filming in and around Aurora would take place Monday and part of Tuesday with Vicki directing and interviewing, her sister, Stephanie, acting as production assistant, and Elliott Haimoff, a documentary filmmaker and owner of Global Science Productions, doing the actual filming. Oswego shooting would start mid-afternoon Tuesday.
As these discussions went on, my wife looked more and more concerned. “Are you going to be in a MOVIE?” she asked, with trepidation obvious in her voice. “And how long have you known about all this?” That last said with a sort of dangerous glint in her eye. I tried to explain that things had been sort of simmering for a while, but that I didn’t figure it was worth getting all excited about until something actually happened. Like Sunday’s meal, for instance. That was definitely something.
Tuesday afternoon, I was able to do a little writing in the morning, and then at noon pick up a healthy lunch at McD’s and head down to the museum to eat and do research. I wasn’t sure what Vicki wanted, but I already had the outline of a story about Frank Vanderlip in mind.
My take on him is that his entire life, personal and professional, was shaped by the series of devastating financial panics that periodically struck the nation. His family lost the farm, at least partly, because of the effects of the Panic of 1873 that apparently resulted in Charles Vanderlip’s assumption of substantial debt. In that regard, he was no different than thousands of other farmers in Illinois and everywhere else in the country. By the time the Panic of 1893 struck, Vanderlip was the financial editor of the Chicago Tribune, where he reported on the economic collapse. In his one-time home county of Kendall, as a measure of how overwhelming the collapse was, all three of its banks failed within two weeks during the summer of 1893.
Fourteen years later, Vanderlip had been in and out of government and was working as a vice-president at National City Bank when the Panic of 1907 struck. That gave him a ringside seat to see how financier J.P. Morgan saved the nation’s financial structure almost single-handedly. Which was when Vanderlip began telling his friends and colleagues—anyone who would listen—that the nation needed to find an answer to those destructive cycles of boom and bust that continually set the country back.
So when Sen. Nathan Aldrich (R-Massachusetts) convened a secret meeting of bankers and financiers (this was back in the day when Republicans were still interested in governing the country with ideas that made at least some sense) at the exclusive Jekyl Island Club off the Georgia coast in November 1910 to figure out how to eliminate the boom and bust cycle, it wasn’t surprising that former Oswego schoolboy Frank Vanderlip was among those invited to attend.
The high-powered group proceeded to hammer out an outline of what they felt should be done to keep the nation’s finances from the tyranny of periodic panics. Although it took a while, their outline eventually became the roadmap for today’s Federal Reserve System, which, while not perfect, has greatly stabilized the nation’s monetary system.
So on that September Tuesday afternoon when Vicki, Stephanie, and Elliott showed up to film a conversation about Frank Vanderlip I was ready to give my take on how Vanderlip’s Oswego years may have informed his views on national financial stability. Sitting down in front of the museum’s permanent business exhibit, we chatted for about 40 minutes. And when Vicki wound up the interview by wondering what I’d say to Vanderlip if I could meet him today, I said I’d thank him for helping create the Fed. It seems pretty clear that without the Federal Reserve’s actions since 2008, the nation would have slipped into possibly one of its worst depressions ever.
From what I hear, the Vanderlip documentary will be released sometime late this year or early next (time will tell, I guess), and is set to be premiered at Palos Verdes Estates, the community Vanderlip created on the California coast near Los Angeles back before World War I. That’s where Vicki lives, and she’s involved with the local history scene there. In fact, her book is actually designed as a fundraiser for the Rancho Palos Verdes Estates Historical Society, of which she’s a board member.
But back to the nation’s finances. If the Federal Reserve and other federal institutions are designed to stop depressions, what’s with what’s been happening since 2008? Granted, the Federal Deposit Insurance Corporation has—and frequently uses—the power to take over failing banks and savings and loans to stop bank runs, and that was a good thing. However, these days, bank runs are not the only things that can cause financial panics. A huge chunk of the nation’s banking is no long federally insured. Firewalls between banks and investment houses were torn down allowing 1920s style financial skullduggery to thrive. In addition, the unregulated, non-bank financial industry was responsible for half or more or all the loans outstanding, leading to the failure of Lehman Brothers, and the near-failure of other institutions that were, however, decided to be “too big to fail.” So those institutions were saved. Unfortunately, the government also decided the institutions’ executives, no matter how corrupt and inept they had proven to be, were too big to prosecute.
I’ve settled on being thankful, at least for a while, for the things that really did work to save the nation from a 19th Century-style financial panic.
On the other hand, one of the greatest failures of the Obama Administration has been to fairly enforce the law, both in terms of the financial crimes committed against the nation, its people, and the world leading up to the crash of 2008, and war crimes committed by those who tortured and murdered in all our names after the trauma of Sept. 11, 2001.
It’s clear we now have a two-tiered justice system, one for the well off and well connected and another for the rest of us. I’m not sure how long a democracy can last given such a situation, but I guess we’re on track to find out.