On June 21,1921, Frederic G. Melcher suggested to the American Library Association that a medal be given for the most distinguished children's book of the year. He also suggested that it be named for the eighteenth-century English bookseller John Newbery
John Newbery (1713-1767) was the first publisher/bookseller to publish & sell books for children. The ones he published were designed to instruct children and also allow them to have fun. He had people like Oliver Goldsmith to write for him, he would also sometimes get people to illustrate his books. In his lifetime the list of juvenile books went up to 400. He did not invent the children's books, but he made them a class of book to be recognized in the book trade.
The criteria for awarding the Newbery medal are as follows:
(from the website of the American Library Association)
1. The Medal shall be awarded annually to the author of the most distinguished contribution to American literature for children published in English in the United States during the preceding year. There are no limitations as to the character of the book considered except that it be original work. Honor Books may be named. These shall be books that are also truly distinguished.
2. The Award is restricted to authors who are citizens or residents of the United States.
3. The committee in its deliberations is to consider only the books eligible for the award, as specified in the terms.