George Willets Davison

Background

George Willets Davison was born on March 25, 1872 in Rockville Centre, New York. He was the son of Robert A. and Emeline Sealey Davison.  

Education

After elementary education in Long Island schools, Davison enrolled at Wilbraham Academy, a sternly religious Methodist institution near Springfield, Massachusetts He then matriculated at Wesleyan University, where he compiled a distinguished record, winning election to Phi Beta Kappa and graduating with honors in 1892.  Two years later he received an LL. B.  from New York University.

Career

Davison developed a thriving law practice in Queens County, N. Y. , from 1894 to 1912.  He served as assistant district attorney in Queens from 1897 to 1899 and as district attorney in 1899.  In 1900 he played a key role as member and secretary of the commission that revised the charter of Greater New York.  

In 1912 Davison gave up law for a career in commercial banking.  He became vice-president of the Central Trust Company, an establishment specializing in corporate fiduciary services that had come to national prominence a generation earlier as a financial agent for various railroads and for the cotton-oil and sugar trusts.  Davison continued as vice-president in 1918, when the bank merged with the Union Trust to form the Central Union Trust Company, sixth largest trust company in the nation.  The next year he became president of the consolidated institution and led it through a period of sustained growth.  In May 1929, as the bank mergermovement reached its apogee, the Central Union joined with the Hanover National Bank to establish the Central Hanover Bank and Trust Company (renamed simply the Hanover Bank in 1951).  The National Hanover's large depository network within New York City and its position as correspondent for smaller banks throughout the Northeast complemented the Central Union's corporate trust business.  

Davison initially became president of the combined organization, and then, in 1933,  chairman of the board.  Upon his retirement in January 1939 he was named honorary chairman.  

As a result of his trust company background, Davison stressed prudent management.  Under his direction the Central Hanover followed a risk-averse lending policy, invested in securities cautiously, and maintained large cash reserves.  In the depression years this strategy proved highly successful.  During Davison's decade of leadership, the Central Hanover became New York's fourth largest bank in deposits and the volume leader in trust business.  While the front-running Chase Bank particularly suffered from spotty earnings as a consequence of its aggressive growth policies, the Central Hanover's earnings and assets rose consistently from year to year.  On principle Davison did not attempt to extend the Central Hanover's influence outside the northeast region.  The bank's profits derived from eleven tightly run branches in New York City.  Unlike its main competitors, which expanded their international operations in the 1930's, the Central Hanover did not open a London office until March 1938, and then only to serve New York clients with business interests overseas.  

Beginning in 1929 Davison won increasing national recognition as a commercial banking spokesman. He headed a commission to review New York State's banking laws in 1929, chaired the Reconstruction Finance Corporation's New York Loan Agency advisory committee in 1932-1933, was chairman of the Clearing House Committee in 1932-1933 and president of the New York Clearing House Association from 1933 to 1935, and served as a director of the Federal Reserve Bank of New York from 1933 to 1938.  

In October 1929 Davison championed the cause of unit banking in an address to the American Bankers Association. A controversy that continued for several years pitted major banks with a large correspondent business against those, like the Bank of America, that advocated nationwide extension of branch banking or chain banking (a variant in which banks in the chain figured as operating subsidiaries of a holding company).

Appearing before the Senate Banking Committee in 1931, he warned also that the extension of branch banking would drain money out of local communities. The 1933 Glass-Steagall Act finally resolved the dispute through a compromise, allowing extension of branch banking for national banks only in states that already permitted it to state-chartered banks. Davison assumed an important role during the banking crisis of 1933. At the request of outgoing Secretary of the Treasury Ogden Mills, he went to Detroit in a vain attempt to help save overextended banks after the collapse of Michigan's banking structure.

Following Franklin D. Roosevelt's inauguration and the declaration of a national bank holiday, Davison chaired a Treasury Department subcommittee that explored the possibility of federal government guarantees that would enable sound banks to reopen. The president rejected the subcommittee's first proposal, but Davison continued to work on alternative plans with Mills, Governor George L. Harrison of the New York Federal Reserve Bank, and presidential counselor Adolf A. Berle, Jr. A plan drawn up by Harrison with the assistance of Davison and Mills eventually became the basis for the Emergency Banking Relief Act of 1933. Davison played a less constructive part in discussions leading to permanent banking legislation. He opposed federal deposit insurance and lobbied unsuccessfully to keep it out of the Glass-Steagall Act.

He took a dim view of much New Deal economic legislation (in 1931 he had advocated repeal of the capital gains tax as destructive of individual initiative). As a director of the Federal Reserve Bank of New York, however, he often proved a skillful analyst of monetary trends. In early 1937, for example, he cautioned against an abrupt rise in reserve requirements. His less prescient colleagues in the Federal Reserve System came to rue their decision to raise the requirements when the action misfired and contributed to the economic downturn later that year.

Achievements

• Davison won increasing national recognition as a commercial banking spokesman.

Works

• book

  • Banking evolution in America: A discussion of mergers, branch banking, chain banking and the unit bank

Views

Davison argued that independent banks in each municipality with intimate knowledge of local business conditions could provide superior service and that dispersion of ownership and control would erect a bulwark against demands for "socialized banking. "

Membership

He was a member of the Wesleyan University board of trustees.

He was a member of board trustees Wesleyan University. Member of New York State Bar Association, Alpha Delta Phi, Phi Delta Phi, Beta Gamma Sigma, Phi Beta Kappa. Clubs: University, Grolier.

Personality

Davison led an uneventful personal life.  A man of sober mien, he boarded the commuter train punctually every morning and returned with equal regularity in the evening to a substantial house in Greenwich, Connecticut.

Connections

On April 24, 1895, Davison married Harriet R. Baldwin.  

Father:

Robert A. Davison

Mother:

Emeline Sealey Davison

Wife:

Harriet R. Baldwin