Henry Bascom Steagall (1873-1943) was a longtime member of the U.S. House of Representatives, representing Alabama's Third Congressional District from 1915 until his death in 1943. The Alabama congressman was best known for co-sponsoring the 1933 Glass-Steagall Act, which established the Federal Deposit Insurance Corporation (FDIC) and also introduced banking reforms. Steagall also co-sponsored the 1937 Wagner-Steagall National Housing Act that created the United States Housing Authority to oversee housing for low-income families.
Steagall was born in Clopton, Dale County, to William Collinsworth and Mary Jane (Peacock) Steagall on May 19, 1873, and was the youngest of four siblings. William C. Steagall was a physician in Clopton and served in the Alabama State Senate. Henry Steagall attended the Southeast Alabama Agricultural School at Abbeville, Henry County, the first free secondary school in the state, and then studied law at the University of Alabama in Tuscaloosa, Tuscaloosa County. He graduated with a law degree in 1893, was admitted to the bar that same year in Union Springs, Bullock County, and then returned to Dale County to practice law in Ozark and begin his political career. Steagall married Sallie Mae Thompson, daughter of William Philip and Mary Thompson of Tuskegee, Macon County, on December 27, 1900. The couple had five children. Sallie Mae Steagall died two years later, in 1908, at the age of 28 and Porter died in 1928 at the age of 22. Steagall never remarried and devoted the rest of his life to public service.
Steagall's first political position was as county solicitor of Dale County; he was appointed by Gov. Joseph F. Johnston and served from 1898 until 1906. A lifelong Democrat, he was elected to the Alabama legislature for one term in 1906. He was subsequently appointed by Gov. Braxton Bragg Comer as prosecuting attorney for the Third Judicial District in 1907 and was elected to a full term in 1910, serving until 1914. During that time, he also served on the State Democratic executive committee (1906-1910) and was a delegate to the Democratic National Convention in 1912. In 1914, Steagall was elected to the U.S. House of Representatives from Alabama's Third Congressional District and took office on March 4, 1915. He would be reelected to 14 consecutive terms in Congress.
Steagall served in a tradition of southern politics in which public officials were elected to Congress at a young age and held the position long enough to move up in the congressional seniority system. His years of service paid off in 1931, when he was named chairman of the House Committee on Banking and Currency. He took the position during Herbert Hoover's presidency early in the Great Depression, a time when the public questioned the dependability of banks as a result of the 1929 collapse of the stock market. Literally thousands of banks, perhaps as many as one-third of all U.S. banks, had failed in the 1920s and into the early 1930s, according to some estimates. Banks in the South were at increased risk of failure because of very low cotton prices during the period.
In January 1932, Democratic senator Carter Glass of Virginia sponsored a bill that would have set regulations for banks and established the FDIC to insure bank depositors' accounts to discourage "runs" or excessive withdrawals. The bill was controversial as many banking officials and politicians thought it would not work or would provide incentives for bad bank management. It was withdrawn from the calendar in the summer of 1932 before the national conventions of both parties so that it would not be an election-year issue. Glass and Steagall then worked together to pass the Federal Reserve Act (also referred to as Glass-Steagall Act) in February 1932. It allowed more member banks to borrow from the Federal Reserve, aiming to stem bank failures owing to lack of access to lines of credit.
In 1932, New York governor Franklin D. Roosevelt defeated Hoover in the presidential election, with bank reform being a major issue during the campaign. One of Roosevelt's first actions as president was to declare a nationwide bank holiday that ran from March 6 to March 9, 1933, temporarily closing the banks for assessment and preventing further runs that might threaten the banks' viability. On March 9, Steagall used his position as chair of the Banking and Currency Committee to push through the Emergency Banking Act of 1933, which legalized the national bank holiday and set standards for the reopening of sound banks after the holiday and lessening financial anxieties. As a result, many customers chose to deposit money that they had been hoarding and ceased withdrawing funds. Steagall reportedly had the only copy of the legislation in the House. He waved it over his head and admonished the chamber to pass the bill, which it did with less than an hour of debate and no amendments. During his time in Congress, Steagall was considered progressive and often advocated for economic policies that went beyond Roosevelt's New Deal plans.
Steagall then addressed the Glass banking reform bill again and agreed to support it if it permitted bank deposit insurance. As a result, an insurance provision was included and his name was added to the legislation, and the FDIC was created. Known as the Banking Act of 1933 and enacted that June, the measure also increased Federal Reserve control over banks and separated investment banking operations from commercial banking operations. It is credited with greatly reducing the frequency of bank closures by increasing depositor confidence. The provision separating investment and commercial operations was repealed by the Gramm-Leach-Bliley Act in 1999. There has been much debate among economists and politicians about whether the repeal helped contribute to the subprime mortgage crisis and subsequent recession in the late 2000s.
In 1937, Steagall teamed with New York senator Robert F. Wagner as co-sponsor of the Wagner-Steagall National Housing Act of September 1937. That legislation created the United States Housing Authority to oversee public housing for low-income citizens and to revitalize slum areas. Steagall continued to serve in the House of Representatives as chair of the Banking and Currency Committee into the early years of World War II. He spent much of that time addressing the needs of Alabama's commercial farmers and other residents of rural America. He was a member of the congressional farm bloc and was close to Edward A. O'Neal, president of the American Farm Bureau and former head of the Alabama Farm Bureau Federation. Steagall supported minimum food prices but opposed food subsidies to control food costs, believing rising wages could support higher prices. Steagall died from a heart attack in office in Washington D.C. on November 22, 1943. He was replaced by George Andrews.
After his death, Steagall was publicly recognized on the floor of Congress as an important ally for farmers and credited with stabilizing the nation's banking industry. Steagall was originally buried in Westview Cemetery in Dale County, but his tomb was later moved to the Ozark City Cemetery. The bodies of his wife and son remain buried in Westview Cemetery.
Steagall's nephew, Henry B. Steagall II, was named in honor of the congressman. Henry Steagall II also entered politics and served as a member of the Alabama legislature and as a member of the Alabama Supreme Court.
Ozark's National Guard Armory was renamed Fort Henry B. Steagall in his honor on April 4, 1965.
Golembe, Carter H. "The Deposit Insurance Legislation of 1933: An Examination of Its Antecedents and Purposes." Political Science Quarterly 75 (Summer 1960): 181-200.
Key, Jack Brien. "Henry B. Steagall: The Conservative as a Reformer." Alabama Review (July 1964): 198-209.
MacDonald, Scott B. "The Rise and Fall of the Glass-Steagall Act." Financial History 83 (Spring 2005): 12-16.
University of Alabama at Birmingham
Published January 30, 2012
Last updated December 16, 2014