The Father of Modern Banking

hugh-mccullochHugh McCulloch (December 7, 1808 – May 24, 1895) was an American statesman and banker who served two non-consecutive terms as U.S. Treasury Secretary, and the only person to ever serve as a cabinet member under four US presidents (Lincoln, Johnson, Arthur, and Cleveland)

Born in Kennebunk, Maine and educated at Bowdoin, McCulloch studied law in Boston before moving to Fort Wayne, Indiana in 1833. He soon moved into banking in 1834, as cashier and manager of the Fort Wayne branch of the state chartered Bank of Indiana.  He served as President from 1835 to 1857, and then president of its successor, the privately owned Bank of Indiana from 1857 to 1863.

In 1862 McCulloch went to Washington, D.C., as a lobbyist for state banks against the proposed legislation creating a national banking system. Despite his efforts the law was passed in 1863. It was intended to help finance the Civil War and provide a uniform, stable national currency. Secretary of the Treasury Salmon P. Chase, impressed by McCulloch’s abilities, asked him to help put the new system into effect as comptroller of the currency. Deciding that the new system was better than the old, McCulloch accepted the job, and became the first Comptroller of the Currency in 1863. During McCulloch’s 22 months in office, 868 national banks were chartered and no failures occurred. The reorganization was challenging because the large eastern banks distrusted the system and disliked having their individuality absorbed in a national system. This objection was compromised by allowing the banks to retain their former names, prefixing or adding the designation “National.” In less than three years the national banking system was in full operation without disturbing the current business of the country. As the first Comptroller, McCulloch recommended major changes in the banking law with the resulting National Banking Act of 1864 serving as the foundation of the national banking system.

In March 1865 President Abraham Lincoln appointed McCulloch as the 27th Secretary of the Treasury. After the Civil War, McCulloch urged that greenbacks issued as emergency currency during the conflict, with no specie backing, be gradually retired in order to reduce war-inflated prices and end speculation in gold. From 1866 to 1868 some $82 million of the greenbacks was gradually retired with an eventual return to gold par value in 1879.

Secretary McCulloch raised the amount due 500,000 discharged soldiers and sailors in less than six months, and also converted $1,000,000,000 of short-time obligations into funded debt in less than two years. He was opposed to legal-tender notes and advocated the return to specie payments and a steady reduction of the national debt, and his views were sustained by Congress.

He is credited with having founded the Secret Service, established 5 July 1865 (as part of the Treasury Department) for the express purpose of stopping counterfeiting operations which had sprung up in this country following the introduction of paper currency during the Civil War.  McCulloch continued to serve in the Presidential Cabinet of Andrew Johnson until the close of his administration in 1869.

McCulloch served an additional term as Secretary of Treasury from Oct 31, 1884 – Mar 7, 1885 under Presidents Arthur and Cleveland, making him (then and since) the only Cabinet member in US history to serve under four presidents.

Link to Wikipedia: