Born in Marietta, Georgia, McAdoo moved to Knoxville, Tennessee in his youth and graduated from the University of Tennessee. He established a legal practice in Chattanooga, Tennessee before moving to New York City in 1892. He gained notoriety as the president of the Hudson and Manhattan Railroad Company and served as the vice chairman of the Democratic National Committee. McAdoo worked on Wilson's successful 1912 presidential campaign and served as the United States Secretary of the Treasury from 1913 to 1918. He married Wilson's daughter, Eleanor, in 1914. McAdoo presided over the establishment of the Federal Reserve System and helped prevent an economic crisis after the outbreak of World War I. After the U.S. entered the war, McAdoo also served as the Director General of Railroads. McAdoo left Wilson's Cabinet in 1919, co-founding the law firm of McAdoo, Cotton & Franklin.
McAdoo sought the Democratic presidential nomination at the 1920 Democratic National Convention but was defeated by Governor James M. Cox. In 1922, McAdoo left his law firm and moved to California. He sought the Democratic presidential nomination again in 1924, but the 1924 Democratic National Convention nominated John W. Davis. He was elected to the Senate in 1932 but was defeated in his bid for a second term. McAdoo died of a heart attack in 1941 while traveling to the third inauguration of Franklin D. Roosevelt.
McAdoo was born during the middle of the Civil War in Marietta, Georgia, the son of author Mary Faith Floyd (1832–1913) and attorney William Gibbs McAdoo, Sr. (1820–1894). His uncle, John David McAdoo, was a Confederate general and a justice on the Texas Supreme Court. McAdoo attended rural schools until his family moved to Knoxville, Tennessee, in 1877, when his father became a professor at the University of Tennessee.
He graduated from the University of Tennessee and was a member of the Lambda Chapter of Kappa Sigma Fraternity. He was appointed deputy clerk of the United States District Court for the Eastern District of Tennessee in 1882. He married his first wife, Sarah Hazelhurst Fleming, on November 18, 1885. They had seven children: Harriet Floyd McAdoo, Francis Huger McAdoo, Julia Hazelhurst McAdoo, Nona Hazelhurst McAdoo, William Gibbs MacAdoo III, Robert Hazelhurst McAdoo, and Sarah Fleming McAdoo.
He was admitted to the bar in Tennessee in 1885 and set up a practice in Chattanooga, Tennessee. In the early 1890s, he lost most of his money trying to electrify the Knoxville Street Railroad system. In 1892 he moved to New York City, where he met Francis R. Pemberton, son of the Confederate General John C. Pemberton. They formed a firm, Pemberton and McAdoo, to sell investment securities.
In 1895, McAdoo returned to Knoxville and regained control of part of his bankrupt streetcar company, which had been auctioned off. In subsequent months, he engaged in a struggle with Ohio businessman C. C. Howell over control of the city's streetcar system, culminating in a bizarre incident known as the Battle of Depot Street. Litigation in the aftermath of this incident favored Howell, and McAdoo abandoned his streetcar endeavors in 1897 and returned to New York.
Around 1900, McAdoo took on the leadership of a project to build a railway tunnel under the Hudson River to connect Manhattan with New Jersey. A tunnel had been partially constructed during the 1880s by Dewitt Clinton Haskin. With McAdoo as president of the Hudson and Manhattan Railroad Company, two passenger tubes were completed and opened in 1908. The popular McAdoo told the press that his motto was "Let the Public be Pleased." The tunnels are now operated as part of the Port Authority Trans-Hudson (PATH) system.
His first wife died in February 1912. That year, he served as vice chairman of the Democratic National Committee.
Woodrow Wilson lured McAdoo away from business after their meeting in 1910 and he worked for the Wilson presidential campaign in 1912. Once he was President, Wilson appointed McAdoo secretary of the Treasury, a post McAdoo held from 1913 to 1918.
He married the president's daughter Eleanor Randolph Wilson at the White House on May 7, 1914. They had two daughters, Ellen Wilson McAdoo (1915–1946) and Mary Faith McAdoo (1920–1988). Ellen married twice and had two children. Mary married three times, but had no children. McAdoo's second marriage ended in divorce in July 1935, and he married a third time at nearly 72, to 26 year old nurse Doris Isabel Cross (1909-2005), in September 1935.
McAdoo offered to resign after his wedding, but President Wilson urged him to complete his work of turning the Federal Reserve System into an operational central bank. The legislation establishing the System had been passed by Congress in December 1913.
As head of the Department of the Treasury, McAdoo confronted a major financial crisis on the eve and at the outbreak of World War I, July – August 1914. During the last week of July, 1914, British and French investors began to liquidate their American securities holdings into U.S. currency. Many of these foreign investors then converted their dollars into gold, as was common practice in international monetary transactions at the time, in order to repatriate their holdings back to Europe. If they had done this, they would have depleted the gold backing for the dollar, possibly inducing a depression in American financial markets and in the American economy as a whole. They might then have been able to buy American goods and raw materials (for their war effort) at greatly depressed prices, which the Americans would have had to accept in order to restart the economy from a consciously (albeit inadvertently) caused depression.
McAdoo's actions at the time were both bold and outrageous. The United States in 1914 was still a net debtor nation (i.e., Americans' aggregate debt to foreigners was greater than foreigners' aggregate debt to Americans). The nations of Europe and their financial institutions held far more in debt of the United States; of many of the states of the Union; and of American private institutions of all kinds, than investors in the United States held in the debt of Europe's nations and institutions in all forms, both public and private.
McAdoo kept the U.S. currency on the Gold Standard. He arranged the closing of the New York Stock Exchange for an unprecedented four months in 1914 to prevent Europeans from selling American securities and exchanging the proceeds for dollars, and then gold.
Economist William L. Silber wrote that the wisdom and historical impact of this action cannot be overemphasized. McAdoo's bold stroke, Silber writes, as a first consequence averted an immediate panic and collapse of the American financial and stock markets. But also, it laid the groundwork for a historic and decisive shift in the global balance of economic power, from Europe to the United States; a shift which occurred exactly at that time. More than this, McAdoo's actions both saved the American economy and its future allies from economic defeat in the early stages of the war.
Investors in the warring countries had no access to their holdings of U.S. financial assets at the outset of the war because of McAdoo's actions. As a result, the treasuries of those countries more quickly exhausted all of their net foreign exchange holdings (those that were on hand and in their possession before McAdoo closed the markets), currency, and gold reserves. Some of them then issued sovereign bonded indebtedness (IOUs) to pay for the war materials they were buying on the American and other markets.
Silber wrote that the intact and undamaged American financial system and its markets managed the flow and operation of this financing more easily than they would have without McAdoo's measures, and that U.S. industry swiftly built up to the scale needed to meet the allied war needs. The managed liquidation of foreign holdings of U.S. assets moved the United States to a net creditor position internationally and with Europe from the net debtor position it had held prior to 1915.
In order to prevent a replay of the bank suspensions that plagued America during the Panic of 1907, McAdoo invoked the emergency-currency provisions of the 1908 Aldrich Vreeland Act. William Silber credits his actions for having turned America into a world financial power, in his book When Washington Shut Down Wall Street.
After the United States entered World War I in April 1917, the United States Railroad Administration was formed to run America's transportation system during the war. McAdoo was appointed Director General of Railroads, a position he held until the armistice in November 1918.
In March 1919, after leaving the Wilson cabinet, McAdoo co-founded the law firm McAdoo, Cotton & Franklin, now known as white shoe firm Cahill Gordon & Reindel. His law firm served as general counsel for the founders of United Artists. He left the firm in 1922 and moved to California to concentrate on his political career.
McAdoo ran twice for the Democratic nomination for president, losing to James M. Cox in 1920, and to John W. Davis in 1924, even though in both years he led on the first ballot. While campaigning in the run-up to the 1920 presidential election, McAdoo voiced his support for such measures as injury compensation, unemployment insurance, and the eight-hour workday, while also expressing his support for the idea of permanent federal legislation in the labor sphere, especially concerning unemployment compensation and a minimum wage.
A committed Prohibition supporter, McAdoo's first presidential bid was scuttled by the New York state delegation and other Northern opponents of the banning of alcohol at the 1920 Democratic National Convention. After defeating his chief rival for the nomination, Attorney General A. Mitchell Palmer, McAdoo finally lost the party nomination to dark horse candidate Governor James M. Cox of Ohio when the delegates decided in his favor on the 44th ballot.
McAdoo was again a candidate for the Democratic presidential nomination in 1924. Widely regarded as the front-runner in 1923, McAdoo's candidacy was badly hurt by the revelation that he had accepted money from Edward L. Doheny, an oil tycoon implicated in the Teapot Dome scandal. At the 1924 Democratic National Convention, McAdoo notably did not reject the endorsement of the Ku Klux Klan. Though McAdoo led after the first ballot of the convention, and on dozens of ballots thereafter, John W. Davis won the Democratic presidential nomination on the 103rd ballot.
He served as Senator for California from 1933 until 1939, having lost his bid for renomination in 1938 to Sheridan H. Downey. McAdoo filed for divorce from his wife in 1934. Two months after their separation was finalized in July 1935, the 71 year old McAdoo married Doris Isabel Cross, a 26 year old nurse.
McAdoo took a payment of $25,000 from oil executive Edward Doheny in connection with the Teapot Dome scandal, but returned it once he discovered the latter's ties to Secretary of the Interior Albert Bacon Fall.
McAdoo died on February 1, 1941 of a heart attack while traveling in Washington, D.C., after the third inauguration of Franklin D. Roosevelt, and was buried in Arlington National Cemetery in Virginia.
McAdoo was played by Vincent Price in the 1944 biopic Wilson. He is a significant character in the Glen David Gold novel Sunnyside, encouraging Charlie Chaplin to help with efforts to raise funds for World War I before advising him on the formation of United Artists. McAdoo's former home in Chattanooga's Fort Wood neighborhood has been restored and is now a private residence.
The town of McAdoo in Dickens County, Texas, is named for him. McAdoo's Seafood Company, a restaurant in New Braunfels, Texas, also bears his name.
McAdoo is quoted as having said, "It is impossible to defeat an ignorant man in argument." And in reference to Warren Harding, McAdoo said his public utterances were "an army of pompous phrases moving over the landscape in search of an idea."William G. McAdoo, The Challenge. New York: Century Co., 1928.
William G. McAdoo, Crowded Years: The Reminiscences of William G. McAdoo. Boston: Houghton Mifflin Company, 1931.
Craig, Douglas B. Progressives at War: William G. McAdoo and Newton D. Baker, 1863–1941. Baltimore: Johns Hopkins University Press, 2013.