Born into darkness: FEI in the 1930s; Financial Executives International (FEI) was born against a backdrop of deep economic troubles. The organization was launched to help financial executives set the professional and ethical tone for their peers for decades to come.

• Author: Cheney, Glenn Alan
• Position: Financial executives international

It was a terrible time in the U.S., the dark December of 1931. Eight million workers had no work. Banks closed. Businesses failed. Investment evaporated. Bankruptcy prevailed. The Dow Jones had dropped to a miserable 41, down from 400, and radicals were questioning the viability of capitalism.

News from the rest of the world was no better. England had just abandoned the gold standard, Japan had invaded Manchuria and Stalin was collectivizing agriculture in the Soviet Union. In Germany, the Nazis held 18 percent of the Reichstag and Mein Kampf was a bestseller.

Two days before the end of that year, eight corporate controllers met in New York City. Their conversation may not have bubbled with economic optimism, but their agenda carried a spark of hope. That agenda was to complete the final details to launch a new organization of financial executives, The Controllers Institute of America. They needed an organization that would let them agree on practical standards and an ethical ideal. They needed to define their profession, exchange ideas about its practice, educate themselves and others, and work with the government to improve the general economy. In short, they wanted to dignify the practice of accountancy at the level of corporate leadership.

The causes of the Great Depression had little to do with these financial executives, but if the nation's crisis had a cure, they believed it was, to a certain extent, in their hands. After all, it was an economic crisis, and they were the men who controlled the money.

The roots of the problem went back 10 years, across a decade of apparent prosperity supported tenuously by credit. Tax breaks for the well-off had engorged the wealthy. Production soared, but middle-class incomes didn't keep up. Consumers enticed by marvelous new vehicles and appliances felt the need to own what they could not pay for. Irrationally exuberant investors, wild with optimism, leveraged the stock market to breathtaking altitudes.

Then, in a week in late October 1929, the credit ran out. In the ensuing months, sales fell, profits plummeted, the stock market crashed, borrowers defaulted, lenders went broke and productivity slowed as if seized by rust. It wasn't just a downturn in the market: It was the collapse of an economy.

President Herbert Hoover, a staunchly pro-business Republican, defended the strength of the economy. The problem, he said, was in the federal budget. Only a balanced budget would sustain public confidence. So he slashed spending, raised taxes and refused to let federal assistance undermine American self-reliance.

But as his efforts reduced demand, they aggravated the crisis. In a last-ditch effort to protect the economy, Hoover signed the Hawley-Smoot tariff on imported goods, the highest import tax in U.S. history. As European nations retaliated with their own tariffs, international trade withered away, and America's Great Depression went global.

Early in 1932, the founders of the new Controllers Institute of America scraped together some cash and leased space at One East 42nd Street in New York City. The first four months were rent-free because nobody wanted the space. The full-year rent was $1,000. On February 4, The Institute had 50 members; that number doubled to 100 by April. They kept a tight rein on expenses and closed their fiscal year in August with a bank...