More than any other single individual, Garner was responsible for the passage of the Glass-Steagall Act of 1933, which created the Federal Deposit Insurance Corporation, putting an end to widespread runs on banks in the United States.

The son of a former Confederate soldier and of a banker’s daughter, John Nance Garner grew up in a family prosperous enough to send him to college at Vanderbilt University in Nashville, Tennessee. A respiratory ailment forced him to leave the damp Tennessee climate after a few months and to return to Texas, where he “read in the law”–that is, he studied on his own in a Clarksville, Texas, law office. At twenty years of age, he passed the bar, and a year later he ran unsuccessfully for city attorney. For health reasons, he moved to the drier Uvalde area, where he practiced law, bought a newspaper, and built a political base.Garner, John Nance

Employing his shrewd entrepreneurial skills, Garner bought thousands of acres of land, three banks, and several other businesses, becoming a very wealthy young man. After serving briefly as a judge, he was elected in 1898 to the state legislature, where he served until he became a member of the U.S. House of Representatives in 1903. He was reelected fourteen times, including in 1932, when he was simultaneously elected vice president of the United States having run successfully with presidential candidate Franklin D. Roosevelt (1933-1945).

In 1928, Garner was elected House minority leader. In the year following the 1930 congressional elections, fourteen representatives died, and the Democrats won the subsequent special elections. As a result, Garner became Speaker of the House in 1931. In 1932, he was the southern states candidate for U.S. president, opposing Roosevelt in the primary elections. The Democratic National Convention that year deadlocked, with no candidate able to gain the necessary two-thirds vote to became the party’s presidential nominee. Garner withdrew his name, and Roosevelt was nominated. Although both Roosevelt and Garner denied that any deal had been made between them, it seems probable that Garner threw his support to Roosevelt in return for the vice presidency.

Garner worked hard for the election of the Roosevelt-Garner ticket, convincing southerners to vote for a northern liberal New York governor, and Roosevelt relied on Garner’s sage advice during the campaign and into his first term. As a former Speaker of the House with as many as twenty old friends in the Senate, Garner successfully guided Roosevelt’s New Deal legislative package through the Congress during the administration’s first Hundred Days.

Garner argued to Roosevelt’s northern liberal advisers that the best way to avoid future runs on banks would be an insurance system. He knew that banks made money by paying their depositors a lower rate of interest on their deposits than the banks charged in interest to their borrowers. Banks naturally wanted to maximize their profits by loaning as much of their depositors’ money as possible. If they loaned too much, however, they would be unable to pay the money back on demand. Conservative bankers always maintained a reasonable reserve, but even the most conservative banker could not maintain a reserve large enough to meet all depositors’ demands simultaneously in the event that the depositors lost confidence in the bank. If most of the nation’s depositors lost confidence in the entire banking system, the system itself would fail. This had happened every few decades since the nation was founded, including in 1933, during the Great Depression.

Garner favored a system in which all participating banks paid a premium to the Federal Deposit Insurance CorporationFederal Deposit Insurance Corporation, which would then guarantee all deposits up to $100,000 per individual depositor. To protect the government from unwise bankers, banks were required to maintain a minimum reserve and to be audited to eliminate overly risky loans. Depositors would no longer need to worry that their money could disappear, so the motive for runs on banks was eliminated. Since the adoption of this system, there has been no general run on U.S. banks.

Roosevelt’s more liberal advisers had favored more extreme measures, nationalizing the U.S. banking system, and Roosevelt himself wavered until he discovered how popular Garner’s solution was. Garner offered Roosevelt other significant economic advice during his tenure as vice president. Roosevelt ignored much of this advice, possibly lengthening the depression and contributing to the recession of 1937-1938.

Garner lost Roosevelt’s confidence and retired to his home in Texas, where he lived longer than any other president or vice president, dying just fifteen days shy of his ninety-ninth birthday.

• Champagne, Anthony. “John Nance Garner.” In Masters of the House: Congressional Leadership Over Two Centuries, edited by Roger H. Davidson, Susan Webb Hammond, and Raymond W. Smock. Boulder, Colo.: Westview Press, 1998.
• Timmons, Bascom N. Garner of Texas: A Personal History. New York: Harper, 1948.
• Wilson, Richard L. “Garner, John Nance.” In American Political Leaders. New York: Facts On File, 2002.

Federal Deposit Insurance Corporation

Great Depression

New Deal programs

U.S. Presidency

Recession of 1937-1938