Full text of "SINCE YESTERDAY THE 1930S IN AMERICA"

The purchase gf this was made .possible by the- frJertds *of DATE DUE 973.91 A42s Allen, Frederick Lewis, 1890-1954. Since yesterday; the nineteen- thirties in 1940. Also available in Perennial Library by Frederick Lewis Allen: THE BIG CHANGE: America Transforms Itself, 1900-1950 ONLY YESTERDAY: An Informal History of the 1920s SINCE YESTERDAY THE 1930s IN AMERICA SEPTEMBER 3, 1929-SEPTEMBER 3, 1939 FREDERICK LEWIS ALLEN PERENNIAL LIBRARY Harper & Row, Publishers New York, Cambridge, Philadelphia, San Francisco London, Mexico City, Sao Paulo, Singapore, Sydney A hardcover edition of this book was published by Harper & Row, Publishers, Inc. SINCE YESTERDAY. Copyright 1939, 1940 by Frederick Lewis Allen. Copyright renewed 1968 by Agnes Rogers Allen. All rights reserved. Printed in the United States of America. No part of this book may be used or reproduced in any manner whatsoever without written permission except in the case of brief quotations embodied in critical articles and reviews. For information address Harper & Row, Publishers, Inc., 10 East 53rd Street, New York, N.Y. 10022. Published simultaneously in Canada by Fitzhenry & Whiteside Limited, Toronto. First PERENNIAL LIBRARY edition published 1972. Reissued in 1986. Library of Congress Cataloging-in-Publication Data Allen, Frederick Lewis, 1890-1954. Since yesterday. Includes index. 1. United States History 1919-1933. 2. United States Economic conditions 1918-1945. 3. United States Social conditions 1933-1945. 1. Title. E784.A63 1986 973.91 86-45060 ISBN 0-06-091322-3 (pbk.) 93 94 95 MPC 10 9 8 To LETTTIA CUNNINGHAM ROGERS who has a wise head and a warm heart CONTENTS PREFACE xiii I. PRELUDE: SEPTEMBER 3, 1929 i i & 2. A Very Hot Day 3. What the Headlines Said 4. The Crest of the Wave 5. "A Friend of Mr Jones s" 6. A Few People, 1929 II. Exrr PROSPERITY 22 1. Panic! 2. Afterglow, 1930 3. Bathtub Gin and the Crime Wave 4. Miniature Golf and Free Wheeling 5. Hoover in Trouble 6. What Did It Mean? III. DOWN, DOWN, DOWN 45 1. In June, 1931 2. The Hoover Moratorium 3. A Dole for Corporations 4. Oh, Yeah? 5. Black Depression 6. The Lindbergh Kidnap Case 7. "Every Man Is Afraid * IV. A CHANGE OF GOVERNMENT 77 1. Roosevelt Nominated 2. The Battle of Washington 3. Rebellion and Ferment 4. Technocracy 5. Poor Hoover! 6. The Banks Give Way 7. Curtain vii viii CONTENTS V, NEW DEAL HONEYMOON 103 1. The New President Speaks 2. Off with a Rush 3. All Roads Lead to Washington 4. Extraordinary Session 5. New And Multiple Deal 6. Happy Days Are Here Again VI. A CHANGE OF CLIMATE 129 1. Marriage and Morals 2. Fashion Parade 3. Repeal and Drinking 4. Play, Sports, Gambling 5. How the Churches Fared 6. The Social Salvationists 7. "We Don t Know" VII. REFORM AND RECOVERY? 162 1. The Honeymoon Ends 2. Reforms, Dionnes, and Uproar 3. Relief 4. Dillinger, G-Men, and Dewey 5* Huey Long and Others 6, The Court Says No VIII. WHEN THE FARMS BLEW AWAY 196 1. Black Blizzards 2. Land of Promise? 3. The Tractors Go Rolling Along 4. Floods and Dams 5. Mature America DC THE VOICE WITH THE SMILE WINS 215 1. The Changed World of 1936 2. The Pump Works Up to a Point 3. Streamlined Trains and Trailers 4. They Hated Roosevelt 5. Landon, The Kansas Coolidge" 6. The Voice with the Smile Wins 7. Ex-Rex CONTENTS ix X. WITH PEN AND CAMERA THROUGH DARKEST AMERICA 250 1. Cocktail Party, 1935 2. "Tobacco Road" and Best Sellers 3. Social Salvationists Writing 4. The Communists 5. Candid Camera 6. Benny Goodman and Bach 7. You Can t Say That 8. Hollywood Heaven XI* FRICTION AND RECESSION 281 I. Rainy Inaugural s. The CIO Sits Down 3. Taylor, Lewis, Girdler 4. The Supreme Court Battle 5. 1937 Montage 6. The Recession 7. Was the New Deal Played Out? XII. THE SHADOW OF WAR 314 1. "We Take You Now to Prague" 2. Isolation or Intervention? 3. Martians and Germans Advance 4. The World of Tomorrow? 5. A Royal Visit and a Summer Lull 6. An Era Ends APPENDIX 347 ILLUSTRATIONS FEMININE IDEAL, 1929 TICKER TAPE FOR BOBBY JONES LINDBERGH KIDNAPPING POSTER BONUS MARCHERS ON THE CAPITOL STEPS THE OLD ORDER CHANGETH HE CAPTURED THE HEADLINES THE BIG APPLE J. P. MORGAN AT THE WITNESS TABLE BLACK BLIZZARD COMING ROOSEVELT RIDES IN TRIUMPH BENNY GOODMAN IN ACTION THE HINDENBURG BURSTS INTO FLAME THE SOUTH CHICAGO "RIOT," 1937 "PEACE" AFTER MUNICH, 1938 ENTENTE CORDIALE, JUNE, 1939 Frontispiece Facing page 48 " 49 " 64 " 6 5 " 144 " " 145 " " 160 " " 161 " " 256 " " 257 " " 272 " " 273 " " 316 PREFACE EVER since, in Only Yesterday, I tried to tell the story of life in the United States during the nineteen-twen- ties I have had it in the back of my mind that some day I might make a similar attempt for the nineteen-thirties. I definitely began work on the project late in 1938 and had it three-quarters done by the latter part of the summer of 1 939, though I did not yet know how the story would end. The outbreak of war in Europe provided an obvious conclu sion, since it promised to end an era perhaps as definitely as the Panic of 1929 had ended one. By an odd chance, the declaration of war upon Germany by the British and French governments took place ten years to a day after that Septem ber 3, 1929, which I had already made the subject of my first chapter. It gave me a turn to realize how precisely the course of events had provided me with a decade to chronicle. The span of time covered in Only Yesterday was from the Armistice of November 11, 1918, to the Panic of Octo ber-November, 1929, with a concluding chapter which re cited the course of events between the Panic and the spring of 1931 and tried to suggest how the temper of the country had altered during that post-Panic interval (The book was published in December, 1931.) When I came to plan the present volume it was clear that some overlapping would be necessary, for obviously the story of the nineteen- thirties should start before the Panic and give some idea of the high place from which the country fell during the economic collapse of 1929-32. Hence my decision to begin with a study of things as they were on September 3, 1929 (which I had written in somewhat different form as an arti cle in Harper s Magazine in 1937), and in a second chapter to cover the Panic and the course of events up to the spring 2111 xiv PREFACE of 1931. The story of the Panic itself, however, I have ab breviated in this book, since I told it in considerabk detail in Only Yesterday. The problem of selection and emphasis, always difficult, is of course doubly difficult when one is writing so close to the event. In Only Yesterday I brought into sharp relief manners and customs, fads and follies, and everyday cir cumstances of life. In the present volume I have done the same thing to some degree, but not quite as much; for the heart of the story of America in the nineteen-thirties was obviously the enormous economic and political transfor mation which took place, and such trivialities as had been of the essence of life in the United States in the nineteen- twenties were now, it seemed to me, less significant. Future events may make my selection and appraisal of material look very dated; in that case I can only hope my very mis calculations may have a certain paradoxical value as indi cating the sort of pitfall into which one readily fell in 1939, even if one were conscientiously intent upon presenting a fair appraisal. F. L. A. SINCE YESTERDAY D Chapter One PRELUDE: SEPTEMBER 3, 1929 O YOU remember what you were doing on September Probably not unless you have an altogether exceptional memory. Let me refresh your recollection. For if we are to under stand the changes in American life during the nineteen- thirties, we must first recall what things were like before this period began before the Panic which introduced the Depression. Perhaps the most convenient way of doing this is to imagine ourselves re-living a single day in 1929: see ing what things look like, listening to the talk, glancing at the newspapers and magazines and books, noticing what are the preoccupations and assumptions and expectations in people s minds and doing all this with the eyes and ears and intellectual perspective of today. I have chosen September 3, 1929, as the day to re-visit, for it was then that the Big Bull Market reached its peak: that the Dow- Jones average of stock-market prices, which had been rising so long and so furiously, made its high record for all time. If there was any single day when the wave of prosperity and of speculation which charac terized the nineteen-twenties may be said to have attained its utmost height before it curled over and crashed, Septem ber 3, 1929, was that day. So let us go back and look about us. SINCE YESTERDAY It is a very hot day, this first Tuesday in September, 1929. Not everywhere, to be sure: in the Far West and South the temperatures are moderate. But from the coast of Maine to the wheatfields of Nebraska the sun beats down implacably. Yesterday was Labor Day; and last night, as the long holiday week end came to its close, the suburban highways approaching the larger American cities were nightmares of congestion as endless lines of cars full of sunburned, sweltering vacationists and week-enders crept cityward through the night, inch by angry inch. On the New Jersey highways leading to New York the tie-up was so complete that people by the thousands, hopeless of reaching the Holland Tunnel for hours, parked their cars in Newark or Hoboken and finished the journey to New York by tube. The railroad stations, too, were jammed with people not only vacationists and week-enders but boy and girl campers returning to town en masse; never had Labor Day traffic been so overwhelming, or the collective discomfort of Labor Day travel been greater. (There were, of course, no air-conditioned cars.) As you get up on Tuesday morning, September 3, after an airless night, the weather prediction in the morning paper offers you no relief. "Fair and continued warm today and tomorrow," it says. You are in for it: for a tem perature of 94.2 in New York; 90 in Chicago, Detroit, and Kansas City; 92 in St. Louis; 94 in Minneapolis; 97 in Boston. After breakfast you go out on the street. The men you see there do not look so very different from those of a decade later, though more of them are wearing starched collars and waistcoats than in subsequent years, and not nearly so many of them are going hatless. But the women are different in- A VERY HOT DAY 3 deed. The fashionable figure is straight up and down- no breasts, no waist, no hips; and if few of the women you see can even approximate this ideal, at least they are visibly making the effort. Not yet have Mae West s curves become a national influence. The waistline if it can be called one is round the hips. The skirts are short, reach ing only two or three inches below the knee: shorter than they will be again until 1 939. (The new evening dresses backless and sleeveless have panels, godets, or drapery hanging about the ankles, but the dresses themselves are still short.) Every dress has a v-neck, almost every sweater even. If this were a wintry day, instead of one of the hottest days of summer, you would see every woman hugging herself energetically to hold in place her straight wrap around coat. The women s hats are small helmets that fit tightly right down to the nape of the neck and so closely surround the face that a profile view of a woman shows hardly more than an eye, the nose, mouth, and chin, a lock or two of hair to decorate the cheek and the helmet. Not all women wear their hair short, but the approved style is to shingle it in the back and draw it forward over the ears. Even in a large city you may see one or two backless dresses among the shoppers and a few pairs of stockingless legs, for the sun-tan craze is in the full flush of novelty. As the advertisements in the Ladies Home Journal declare, "This is a sun-worshipping year ... all the world has gone in for sun-tan." You will have to look long and hard to de tect any tinted nails, however; that style is still in the future. The automobiles surging by you are angular; there isn t a streamline among them. Horizontal and perpendicular lines; square tops, with the upper rear angle hardly rounded at all; perpendicular or almost perpendicular windshields; perpendicular, flat radiator fronts. No pointed or rounded prows, no sloping rears, no draft ventilators. You will not be able to go far, in the central part of any 4 SINCE YESTERDAY of the big cities, without hearing the deafening clatter of riveters, for although the Florida boom went to pieces in 1956, and the boom in suburban developments which has been filling up the open spaces in the outskirts of the cities with Cotswold Terraces and Rosemont Groves and Wood- mere Drives has been lagging a bit since 1927, the boom in apartment-house construction and particularly in office- building construction is still going full tilt. Not in the poorer districts are the riveters noisiest, but at the centers of big business and of residential wealth, for it is the holders and manipulators of securities who are the chief bene ficiaries of this last speculative phase of Coolidge-Hoover prosperity. That network of steel girders which you see rising so high above the street is going to be a luxurious co operative apartment house; that place where the sidewalk is roofed over and the steam shovels are gobbling up an im mense excavation is the site for a new skyscraper for brokers offices and investment-trust offices and mortgage-bond sales men. In New York they are tearing down the old Waldorf- Astoria to make room for a skyscraper to end skyscrapers, the Empire State Building. John IX Rockefeller, Jr., has architects quietly at work making preliminary plans for a big mid-town development which he hopes will have a new Opera House as its central feature (he doesn t know yet that the Opera will decline to come in and that his colossal investment will have to take new shape in a Radio City). The Chrysler Building and several other major skyscrapers are still shooting upward. Most of the other cities of America are doing their best to emulate New York s frenzy for monu ments of steel and stone ever loftier, more ambitious, and more expressive of the era of confident speculative finance. As you walk on, a man passes you whistling "Singin in the Rain," which at the moment rivals "The Pagan Love Song" and "Vagabond Lover" in popularity. A VERY HOT DAY 5 Here is a movie theatre advertising Al Jolson in "Say It with Songs* ; across the street another one advertises "Our Modern Maidens/ with Joan Crawford (still in her harum- scarum phase) and Rod La Rocque. A little further Ronald Colman may be seen in "Bulldog Drummond/ The fact that this is advertised as Mr. Colman s "first all-talking picture" bears witness that the invasion of the movies by sound is not yet complete. Even in the big cities there are still silent pictures competing with the talking ones. The migration of Broadway stage celebrities to Hollywood has been under way for some time, as movie producers search for actors who can speak their parts acceptably, but still the studios are fumbling uncertainly with the new medium, and still the critics regard the "talkie" as some thing of an awkward parvenu. When your local theatre, succumbing to the trend of the times, gets itself wired for sound, the noises which blare forth are sometimes wonder ful indeed. The actors lisp absurdly; the outbursts of song, coming after "silent sequences," are often cacophonous; and as Gilbert Seldes remarks in an article in the current Har per s, "The tinkle of a glass, the shot of a revolver, a footfall on a hardwood floor, and the noise of a pack of cards being shuffled, are all about alike/ Steadily, however, the medium is being improved; and indeed there are many people in this era of rapid engineer ing advance and bold business enterprise who are won dering whether the talking picture will not soon be super seded in its turn by television. "Within twelve months eighteen months at the latest the talkies will have to meet the competition of the talkie-projector in the home," writes Mr. Seldes. "... And within another year we shall prob ably have the simple and comparatively inexpensive mech anisms, now being perfected, which will throw on a small screen set up beside the home radio set a moving picture projected from a central broadcasting station/ 6 SINCE YESTERDAY If you are to be in New York this evening, perhaps the stage will be more to your taste than the movies. "Street Scene" is having a long run there, and so is that grim reminiscence of, war, " Journey s End," which you may pre fer if you have liked the current best-selling novel, All Quiet on the Western Front. Eddie Cantor is on the stage in "Whoopee," you can see Bert Lahr in "Hold Every thing!" If you enjoy opening nights, you can go to the first performance of a new musical show called "Sweet Adeline," which exemplifies a budding tendency to turn back in nostalgic mood to the sentiments of the gay nineties. If you had rather sit quietly at home on such a hot night and listen to the radio, you can hear the Fada Symphony Or chestra, the Pure Oil Band, Whiteman s Old Gold Orches tra, or the Freed Orchestradians. Not yet has the technique of the radio variety show been perfected, nor can you listen in on a world-wide broadcast, but the crooners led by Rudy Vallee are on the air in full force. The average price of a radio set is still as high as $135, for the low- priced small sets have not yet come on the market. In these prosperous times, however, radios are being bought in quantity despite their size and price, and already some twelve million American families own them. Let us look at the newspapers. They may help us to orient ourselves. What will tomorrow morning s headlines say about today s events? They will agree that the most exciting and important events of September 3, 1939, aside from the heat wave and purely local happenings, are a speech by the Prime Minister of England, a golf tournament, and two incidents in aviation. The Prime Minister is Ramsay MacDonald; his speech is delivered at Geneva before the Assembly of the League of WHAT THE HEADLINES SAID 7 Nations. (Yes, the League, in 1929, is an important though hardly determining factor in international relations.) Mac- Donald announces in his speech that negotiations between Great Britain and the United States for the limitation of naval armaments are progressing favorably, and that full agreement seems near. He hopes shortly to visit the United States to further that agreement. (He will come, a little later, and he and President Hoover will sit and talk on a log by the Rapidan River near Hoover s rural camp.) These armament negotiations of 1929 are incidents in the long post-war struggle for agreement and for national ad vantagein a Hitlerless world. Germany is a republic and a member of the League of Nations; the Dawes Plan of col lecting reparations from Germany is about to be succeeded by the less oppressive Young Plan; France, the most power ful nation on the Continent, still occupies the Rhineland. Japan has not yet gone into Manchuria, let alone into China, nor Italy into Ethiopia; Spain is not yet torn by civil war; and Adolf Hitler is the little-regarded leader of a noisy minority of German Brown Shirts, his name quite unknown to most Americans. There is plenty of tension, to be sure. National feelings run high, and for years past the attentive students of inter national affairs have been intermittently predicting a major war. At this very moment there is a grave threat of war be tween Russia and China. Mussolini is cherishing dreams of empire; there are Arab riots in Palestine; and Gandhi is giving trouble to the British in India. But still in the main the lines drawn at Versailles in 1919 are holding, and the democratically governed nations are on top. Much more exciting than Ramsay MacDonald s address, to most Americans, is another front-page event of Septem ber 3: the National Amateur Golf Championship at Pebble Beach, California. The incomparable Bobby Jones is there, tying for first place with Gene Homans in the qualifying 8 SINCE YESTERDAY round. Will Jones go on victoriously to win his fifth Ameri can amateur title? (He will not; he will be beaten tomorrow by young Johnny Goodman, who in turn will be beaten by nineteen-year-old Lawson Little. Not till next year will Jones be able to perform the feat of taking the British ama teur and open titles, and the American amateur and open, all in one season.) Meanwhile the question whether Jones will win is in millions of people s minds all over the coun try; for golf is in its heyday as the business man s game. For years past, aspiring executives have been drilled in the idea that afternoons spent in plus-fours provide not only enjoy ment but useful business contacts, and country clubs have been becoming more palatial, more expensive, and more heavily mortgaged with membership bonds. Of the two headlined incidents in aviation, one is a tri umph, the other a disaster. The triumph belongs to the great German dirigible, the Graf Zeppelin. Having successfully circled the world, it is now on its way home across the At lantic from Lakehurst to Friedrichshafen; by the evening of tEe third of September it has completed the ocean cross ing, and observers in little Spanish towns see it floating overhead, its cabins brilliantly lighted against the sky. So impressive has been the Graf Zeppelin s demonstration of the possibilities of lighter-than-air flying that the designers of the Empire State Building are about to build a mooring mast on top of the skyscraper; they will announce their deci sion on December 1 1 with this somewhat premature proph ecy: "The directors of Empire State, Inc., believe that in a comparatively short time the Zeppelin airships will establish transatlantic, transcontinental, and transpacific lines, and possibly a route to South America from the port of New York. Building with an eye to the future, it has been deter mined to erect this mooring tower." In striking contrast to the Graf Zeppelin s triumph is the air disaster of September third: the crash of a Transconti- WHAT THE HEADLINES SAID 9 nental Air Transport plane in New Mexico during a thun derstorm, with the loss of eight lives: a severe setback to heavier-than-air flying. One might be misled by the word "Transcontinental/ There is no coast-to-coast passenger service by air in 1929. During the summer the T.A.T., with Colonel Lindbergh as its adviser, has begun a pioneer service in conjunction with the Pennsylvania and Santa Fe railroads: passengers take an overnight train from New York to Columbus, Ohio; fly by day from Columbus to Waynoke, Oklahoma; take another overnight train to Clovis, New Mexico; and then continue by air to the Coast. In newspaper advertisements you may see Lionel Barrymore as he alights from the "Airway Lim ited," which has reduced the journey from New York to Los Angeles to the record-breaking time of forty-eight hours. No night flying is permitted. Yet now, before the first sum mer is over, one of the big Ford trimotor planes has gone smashing into Mount Taylor in New Mexico. The disaster is an ugly blow to the fledgling air-transport industry. Since Lindbergh s flight to Paris in 1927 the adventurers of the air have been crossing oceans boldly, airplane stocks have been soaring, and the Post Office Department has been success fully flying the mail across the country; but passenger flying in the United States is still in its hazardous and uncertain infancy. The newspapers which record the events of September 3, 1929, contain other items of interest. You will learn in them that in Gastonia, North Carolina, a jury has been chosen for the trial of sixteen strikers and alleged Communists for the killing of the Chief of Police. (Yes, there is occasionally a bitter industrial conflict in the nineteen-twenties, even though unionism is weak, the membership of the American Federation of Labor has dwindled, and radicalism is almost negligible. There is, of course, no CIO.) You will learn that Commander Byrd not yet an Admiral is waiting in the io SINCE YESTERDAY snows of Little America for his flight over the South Pole. Babe Ruth, you will discover, is still top man in baseball: though he has made no home run on September 3, his rec ord for the season, so far, stands at 40 home runs as against 31 for Jimmy Foxx and 29 for Lou Gehrig. Bill Tilden is expected to win the amateur tennis championship at Forest Hills (and will do so for the seventh time), but his era of supremacy, like Bobby Jones s and Babe Ruth s, has not long to run. (His seventh championship will be his last.) From the social columns of the newspaper you may learn that Alfred E. Smith has wandered far enough from the torrid sidewalks of New York to be the guest of honor at a lunch eon at fashionable Southampton. Having been defeated by Herbert Hoover in the national election of 1928, Smith is now preparing himself for a loftier if narrower Presidency that of the Empire State Building. 4 But the event for which September 3, 1929, will probably be longest remembered in the United States, you will not find recorded in the newspapers at all. No headlines will announce tonight that the Big Bull Market has reached its climax; for no headline writers nor anybody else for that matter can see into the future. The financial reporters will remark, to be sure, that bullish enthusiasm has resulted in "another in the long series of consecutive new high records established by the share market/ but the comment will be casual. Men do not whip themselves into frenzies over the usual. None of us is aware, on September 3, 1929, that the people of the United States are crossing one of the great divides of national history. The way ahead is hidden, as always, by fog. Surely, we imagine, there is higher ground just ahead. Yet at this very moment the path under our feet is about to turn downward. THE CREST OF THE WAVE n Suppose we go into a broker s office this morning. It is crowded with men and women; every seat is taken, men are standing against the walls, and during the lunch hour there will be a dense cluster at the door as business men on their way to lunch stop by to see how their fortunes are faring. All eyes are riveted on the trans-lux screen, across which runs an endless procession of letters and figures the record of sales taking place on the New York Stock Exchange. The tickers are having a hard time to keep up with the trading today, for the volume of transactions, though not phenome nal for 1929, is large: the day s total will run to nearly four and a half million shares. Probably half the people in this room have bought stocks on margin; in the whole United States, probably well over a million people are thus specu lating with borrowed money, while several millions more are keeping a hopeful eye upon the daily fluctuations in market prices. The financing of all these speculative bor rowings has sucked into the stock market a huge amount of credit; at this very moment the total of loans to brokers- loans by the banks, and by business corporations acting through the banks comes to over eight billion dollars; yet still the demand so far exceeds the supply that the interest rate for loans to brokers stands today at nine per cent. If you can interpret the symbols as they hurry across the lighted screen, notice the prices they record. United States Steel is edging up to 261^; Anaconda Copper is at 130%; American Telephone, at 302; General Electric, at 395; Gen eral Motors, at 71 %; and Radio Corporation, which recently split its shares five for one, is quoted on the new basis at 99 (which would be 495 on the old basis). Absurdly high, these prices? Not in the opinion of most of the men in this room. Wherever men of property gather these days in business offices, in the suburban club cars, at the downtown lunch tables, in the country-club locker rooms you will hear that this is a new era, that the future of the blue-ribbon stocks 12 SINCE YESTERDAY is dazzling, that George F. Baker never sells anything, that you can t go far wrong if you are a Bull on America. "These new investment trusts are taking the best stocks out of the market; better buy them now, while they re still within reach/ "Prices too high? But look at the figures that the Blue Ridge Corporation has just announced that it ll pay! Those fellows know what they re doing." "One of the big gest men in the Street told me yesterday that he expects to see General Electric go to a thousand." "I tell you, Electric Bond and Share at 183 is dirt cheap when you consider what s ahead for the public utilities." It is not only in the places where the wealthy congregate that one hears discussion of the market. In these days when janitors have put their savings into Montgomery Ward, when cowboys have margin accounts in American Can, and when nursemaids have just bought 200 shares of Cities Service, stock-market talk is recurrent at dinner parties, in streetcars, on commuting trains, among filling-station em ployees, among bookkeepers lunching at the automat. The stories about big winnings, the conjectures about foolproof methods of stock-market forecasting, the gossip about Packard s current earnings, form the leitmotif of the times. In every era young intellectuals tend to be rebellious. Do they, in 1929, rebel against the speculative frenzy of finance capitalism? Very few of them do. If most of them look askance at American business and American business men, it is only because they regard them as vulgar and commer cial-minded. The heaven of the young intellectuals of 1929 is not Moscow but Montparnasse; their gods are not radical economists or novelists of proletarian revolt, but Proust, Cezanne, Jung, Mencken, Hemingway (as a Left Bank author of terse disillusionment), and T. S. Eliot. In Chicago, Samuel Insull is now at the summit of his career; he is watching the stock of Insull Utilities Invest mentsthat stock which was delivered to him only a few THE CREST OF THE WAVE 13 months ago at less than $8 a sharereach a high price for the day of $115 a share; and he is preparing to launch yet another super-super-corporation, and to witness the Civic Opera s first season in the mammoth building which he has provided for it. In Cleveland, men of vision are betting their shirts on those wonder-boys of railroading, the brothers Van Sweringen, who have so piled holding company upon holding company that they now control six railroads and are acquiring control of a seventh. In Detroit the big bank ers and automobile executives, succumbing to the prevalent fever for financial concentration, are discussing a movement to combine dozens of Michigan banks into huge groups. On the Pacific Coast, the current financial sensation is Amadeo Giannini s Bank of America, which seems well on its way to swallow up all California business, if not to dominate a large part of American banking. Charlie Mitchell s sales men from the National City Company in New York are selling South American bonds to the little crossroads bank, and Anaconda Copper stock to the bank s president. The optimism of prosperity is everywhere. Well, not quite everywhere. The farmers of America are not prospering: hard times have been almost incessant on the farms since the post-war collapse of agricultural prices in 1921. The textile towns of New England are in a bad way. In the deep South and the uplands of the Alleghenies, and in the cut-over regions of northern Michigan, there is much privation. Nor can it be denied that there is unem ployment. To paraphrase the words of F. C. Mills in his Economic Tendencies in the United States, the displace ment of men by machines, the turnover of men within industries, and the shifting of men from industry to indus try, are making men less secure in their jobs, and especially are making it harder for men past the prime of life to get back into new jobs once they are displaced. The rewards for employed men are often high, but mechanical improve- 14 SINCE YESTERDAY ments and a faster pace of work are making it harder to hold on. And it must be admitted, too, that when one uses the word prosperity one is using a relative term. According to the Brookings estimates, even in this banner year of 1929 no less than seventy-eight per cent of the American popula tion have family incomes of less than $3,000 or individual incomes of less than $1,500, and something like forty per cent have family incomes of less than $1,500 or individual incomes of less than $750. Certainly such a state of affairs is far from Utopian. Yet by all current standards elsewhere in the world, and by all remembered standards in America, the average of well-being is high; and among the well-to-do it is glittering. President Hoover has just returned to the blinding heat of Washington from a week end at his Rapidan camp, and this morning he meets with his Cabinet from 10:30 till 12. No record will be kept of what goes on at that meeting, but one may hazard a reasonable guess as to some of the topics under discussion The talk may turn to the armament nego tiations with Great Britain, or to some thorny questions of tariff adjustment, or to the danger of a Russo-Chinese war over the Chinese Eastern Railroad. Mr. Hoover may consult his Cabinet as to whether he should denounce the ship building companies which retained William B. Shearer as an "observer* at the Geneva arms conference, presumably to hinder naval reduction. (He will denounce them, three days hence.) There are also awkward questions relating to Prohibition, farm relief, and Mexican policy which may come before the meeting. Are those men gathered about the long table in the White House offices turning their at tention today to the question whether prosperity can be maintained? It is possible, but unlikely. Not that Herbert Hoover shares the widespread belief that the speculative debauch in the stock market is a happy and healthy phenomenon. On the contrary, he has been THE CREST OF THE WAVE 15 supporting the Federal Reserve Board in its unavailing efforts to check the flow of credit into speculation, and he has done his share of worrying over the possible conse quences of a collapse of prices. But by this time the boom is well beyond control, except by some drastic measure which might bring on the very crash it was intended to avert. Otherwise the economic skies seem clear. Business is un deniably booming. Perhaps the speculative storm will man age to blow itself out and all will be well. Prosperity, these days, has come to be taken for granted; and busy men whose desks are piled with problems pressing for solution do not borrow trouble by debating just when and how it might come to an unimaginable end. Besides, the maintenance of general prosperity is not, in 1929, generally regarded as a presidential responsibility. The New York Herald Tribune is going to press tonight with a laudatory review of Hoover s first six months in office, and nowhere in that review will there be a word about the stock market or so much as a hint that the maintenance of general economic stability is the government s affair. In every political election, of course, the party in power, as a matter of routine, takes all credit for whatever good times have been enjoyed, and the party out of power excoriates it for whatever hard times have been suffered; but the most that is really expected of the government from month to month, in relation to the progress of the national economy, is that its policies of taxation, regulation, subsidy, and the like, shall if possible be helpful to business rather than hurt ful, and particularly shall be helpful to those business inter ests which are able to write their wishes into legislation. Otherwise the government is expected to keep its hands off. Insofar as the economic machinery does not run of its own accord, automatically, the citizens look less to the political chiefs in Washington for economic leadership than to the financial chiefs in Wall Street. Not Herbert Hoover and his 16 SINCE YESTERDAY Cabinet but the bankers and industrialists and holding- company promoters are the architects and custodians of this prosperity. But if the maintenance of prosperity is not considered a current problem, Prohibition emphatically is. The Eight eenth Amendment is in full force, and so are the bootleggers and rumrunners. Al Capone, as it happens, is serving a year s sentence in Philadelphia for carrying a pistol, but he will be out soon; meanwhile his Chicago gang and similar gangster groups in other cities are taking an enormous toll from the illicit liquor business. Very few people believe that repeal of the Eighteenth Amendment is a reasonable possibility; any well-informed student of politics will tell you that a few dry states could block it indefinitely. Moral ists are attributing the prevalence of crime to the dire influ ences of the speakeasy. If your rambles this afternoon should take you through midtown New York, you may notice well-dressed men and women descending the steps to the basement entrances of certain brownstone houses. They are not calling on the cook, but making a routine entrance to a speakeasy: stand ing patiently at the door till Tony or Mino, within, has appraised them through a little barred window and decided to unbolt the door. The man-about-town carries in his wallet a collection of autographed speakeasy cards, certify ing to membership in this or that "club/ in case he should wish to go for a drink to some place where he is not already well known by sight as a patron or can identify himself as a "friend of Mr. Jones s/ President Hoover has appointed a commission to study the whole question of law enforcement and crime; and this very day its chairman, George W. Wickersham, is on a train A FEW PEOPLE, 1929 17 from New York to Washington, going over the agenda for tomorrow s meeting. Prohibition is only one of the topics which this commission will investigate; indeed, though the minutes of tomorrow s meeting will cover five pages, only two lines will deal with liquor legislation. But to the general public nothing in the commission s program really matters except Prohibition. For the wet-or-dry issue is the hottest one in American politics. 6 At any moment some currents in the great stream of his tory are diminishing, and other currents are gaining in volume and strength. At any moment there are things end ing, waves of popular excitement subsiding, men moving into the twilight of their careers; and there are also things beginning, future events being quietly prepared for, men and women walking about unknown whose names will soon be on everybody s lips. On this September day of 1929, the last surviving veteran of the Mexican War is dying. . . . Ex-President William Howard Taf t, now the Chief Justice of the Supreme Court, is in declining health, and has but a few months more to live. . . . Thomas A. Edison s achievements as an inventor are behind him, for he is in his eighty-third year. On this hot day he is convalescing from an attack of pneumonia, but is sitting up in a chair and declaring that he expects to go to Dear born in a few weeks to celebrate the fiftieth anniversary of his incandescent light. (The expectation is justified, for he still has two full years to live.) . . . Calvin Coolidge s life- work is behind him, too. Last March he left the White House for his simple duplex apartment on Massasoit Street, North ampton, where the rent is $36 a month; and although he is said to have made a hundred thousand dollars writing maga zine articles since March 4, he still uses a little second-story i8 SINCE YESTERDAY office with a desk, two chairs, and a bookcase filled with old law books. Life is quiet for him, these days, too quiet; he longs for the days that are done. ... In the day s news there is an echo of the oil scandal of the Administration which preceded Coolidge s: Harry F. Sinclair, serving a term in the District of Columbia jail for contempt of the Senate during the oil investigations, has been denied permission to leave the jail on errands as the jail physician s "pharma ceutical assistant." It has been said that coming events cast their shadows before. But if this is true, the shadows are not recognized as such. On September 3, 1929, Governor Franklin D. Roosevelt of New York State, who ran for the Governorship last year at the urgent invitation of his old friend Al Smith, is awaiting replies to a questionnaire which he has just sent out to mayors and village presidents throughout the State. The questionnaire asks them on what basis their communi ties buy electric power from private utilities or from municipal plants? and at what cost? This inquiry might seem prophetic, but to mortals denied the gift of prophecy it does not seem especially significant. The men who are pushing up the prices of public-utility stocks to Himalayan levels are not greatly disturbed. For anybody in Albany will tell you that Roosevelt is just collecting information which he thinks he needs in order to carry out Al Smith s power policy. If you follow the liberal weeklies carefully, you will see occasional caustic references to that autocratic reactionary, that stubborn member of the A F of L bureaucracy, the leader of the United Mine Workers, John L. Lewis. . . . Father Coughlin of Royal Oak, outside Detroit, is well known within the range of the single broadcasting station which transmits his sermons but almost unknown beyond them. ... In Long Beach, California, there is an elderly practicing physician named Francis E. Townsend, quite un- A FEW PEOPLE, 1929 19 known save to his patients and personal friends: the time for the Townsend Pension Plan is still far away. . . . Huey Long is in the midst of a stormy term as Governor of Louisi ana, but Northerners have heard little of him yet. . . . The people who are accustomed to sitting in a Greenwich Vil lage speakeasy and occasionally hearing young Howard Scott a none-too-successful engineer expound his curious economic theories, would be amazed if they were told that within four years Technocracy will be the talk of the United States. Broadcasters take a day off every week, and so on this September 3 Freeman F. Gosden and Charles J. Correll are getting a rest after their first fortnight on the NBC net work as "Amos n Andy/ In two months their program will be changed from a late evening hour to 7 P.M., Eastern Standard Time, and within a year their popularity will be so immense that one will hardly be able to walk a block in an American town at that hour without hearing Tse re- gusted" and "Dat s de propolition" issuing from open win dow after window. Have they any inkling of what is ahead for them? Does Garnet Carter of Lookout Mountain, Ten nessee, who is today boarding a train for Miami to install the first miniature golf course in Florida, dream that by next summer miniature golf courses will be springing up by every highway all over the land? Does Walt Disney, who, after years of adversity, is at last finding a public for his Mickey Mouse pictures and has just brought out his first Silly Symphony, foresee his fame and fortune as the creator of Three Little Pigs" and "Snow White ? As the heat of the day begins to wane in Cazenovia, New York, a young writer named Hervey Allen sits down to work at the second chapter of a huge novel which will not be published for nearly four years: Anthony Adverse. . . . In the John Day publishing house in New York, the editors are making up their minds to publish a novel called East so SINCE YESTERDAY Wind, West Wind, which has been declined already by so many publishers that its author has not even bothered to tell her agents that she has left China for a visit to the United States. In her mind is taking shape another novel; who guesses that this yet unwritten book, The Good Earth, will win for Pearl Buck the. Nobel Prize? . . . Who, for that matter, would ever pick a freckle-faced, fourteen-year-old boy in Oakland, California, named Donald Budge, as the future world s tennis champion? The boy hasn t even touched a racket since he was eleven. . . . Recent gradu ates of Gushing Academy at Ashburnham, Massachusetts, remember well their schoolmate Ruth Elizabeth Davis, but not in connection with Hollywood; for not until 1930 will she begin her screen career. (Later they will see her often as Bette Davis.) ... In one of the Middle Western cities, if you drop into a theatre on the Orpheum vaudeville cir cuit tonight, you may be amused by a young ventriloquist named Edgar Bergen talking to a dummy that he calls Charlie McCarthy. ... If you are in New York and the heat drives you to a roof garden for the evening, and you happen to choose the Park Central Hotel, you may appre ciate the nimbleness of a twenty-year-old clarinetist in the band; but his name will be as unfamiliar to you as those of Bergen and McCarthy: it is Benny Goodman. Does anybody think of himdoes he think of himself as the future King of Swing? Everybody who follows the newspapers at all closely in 1959 can identify for you instantly Bishop Cannon, Texas Guinan, Senator Heflin, Jimmy Walker, Hugo Eckener, Legs Diamond, Mabel Walker Willebrandt, Dolly Gann, or "Doug and Mary." But even your local newspaper editor, who prides himself on knowing the names of public char acters, will probably have to go to books of reference to identify General Hugh S. Johnson, Alf M. Landon, Harry Hopkins, Thomas E. Dewey, or Eleanor Roosevelt. And A FEW PEOPLE, 1929 si not in any book of reference will he find Joe Louis, Bruno Richard Hauptmann, Robert Taylor, the WPA, or the New Deal. In all the country there is no such thing as a streamlined train, a bar operating openly and legally, or a man living on Federal relief. Shirley Temple is a baby less than five months old, and the Dionne quintuplets are unborn. And so, for that matter, is the Depression. In fact, if you wished to be set down as the craziest of prophets by any of the men and women whom you have watched going about their affairs in the glaring sunlight of September 3, 1929, you would only have to tell them that within two months they are to witness the greatest financial panic in American history, and that it will usher in a prolonged and desperate economic crisis. Chapter Two EXIT PROSPERITY AFTER September 3, 1929, the stock market dropped \ sharply, surged up again, dropped againand did not surge back. Instead, as September came to an end, it sagged lower and lower. Even so, there was not at first much uneasiness. Again and again, during the Big Bull Market of the two preceding years, there had been sharp breaks lasting several days, thousands of injudicious and unfortunate speculators had been shaken out, and yet prices had recovered and climbed on to new heights. Why worry now? Why not take advantage of these bargain prices? And so margin traders, large and small, who had previously sold out at big profits came float ing in again, staking their previous winnings on the chance that Steel would climb back from 230 to 260, or General Electric from 370 to 395, and beyond; and accordingly the volume of brokers loans rose to a new and final peak of over eight and a half billion dollars. Meanwhile the chorus of financial prognosticators assuring all and sundry that nothing was amiss, and that prices were suffering only a temporary setback, rose louder than ever. Yet still the market sagged. Foreign funds were being withdrawn from it, partly as a result of the collapse of Hatry s speculative bubble in England, partly, perhaps, because speculation in New York had seemed from the first a hazardous business to European investors and many of them were now having qualms. Some American investors, too, were prudently withdrawing as they noticed that the 22 PANIC! 23 volume of industrial production was declining a little. All the time, as prices ebbed, insecurely margined traders were being forced to sell. As October continued and there was no smart recovery, a note of uncertainty, of urgency, of stri dency, even, came into the clamor that all was well. Perhaps, after all, it was not. . . . The decline became more rapid. Surely this must be the bottom, the last chance to buy cheap. Or was it the beginning of the end? The short session of Saturday, October 1 9, was a bad one, such volatile stocks as Auburn and Case losing 25 points and 40 points respectively in two hours of trading, and even General Electric losing 91^. Monday, October 21, was worse, for by this time more and more traders were reaching the end of their resources and being sold out; the volume of trading reached six million shares. Tuesday was better: did not the great Charles E. Mitchell of the National City Bank, re turning from Europe, radiate assurance? But on Wednes day the storm broke anew and the losses were unprece dented: Adams Express lost 96 points during the day, Auburn lost 77, Westinghouse lost 25, and the stock-market page of the late afternoon papers showed a startling proces sion of minus figures down the column of "net change": -6}/, -3, -i4$4 -7, -21/2, -1614, -12, and so on. By this time the volume of selling was so great that the supposedly almost instantaneous ticker service was left far behind; at three o clock, when the Exchange was closing for the day, the figures running across the trans-lux screens in brokers offices all over the country were reporting transactions which had taken place at sixteen minutes past one an hour and forty-four minutes before! And on Thursday, October 24. ... That Thursday morning the selling came in a roaring and presently incredible deluge. How much of it was short selling will never be known, for no statistical record of the total was kept, but apparently the amount was not very 5?4 SINCE YESTERDAY great. Some of it, of course, was frightened selling, even at the outset: already men and women had discovered, to their great alarm, that the slow gains of weeks and months could be swept away in a few precipitous hours. But even in the first hour on Thursday the greater part of the selling was surely forced selling. In a market so honeycombed with credit, the beautifully contrived system whereby the stock gambler whose margin was exhausted by a fall in market prices was automatically sold out, became a beautifully con trived system for wrecking the price structure. In poured the selling orders by hundreds and thousands; it seemed as if nobody wanted to buy; and as prices melted away, pres ently the brokers in the howling melee of the Stock Ex change were fighting to sell before it was too late. The great Panic was on. By noon that day, dismayed crowds of men and women in brokers branch offices everywhere saw the ticker record ing unbelievable prices, and realized furthermore that it was so hopelessly behind the market as to be well-nigh use less as a clue to what was actually taking place in the mael strom of Wall Street, where Montgomery Ward was falling headlong from 83 to 50, Radio from 68 3^ to 4414, even United States Steel from 205^ to 1931/2- To the rescue came the big bankers. A few minutes after noon, five of them Messrs. Lamont of J. P. Morgan & Co., Mitchell of the National City Bank, Potter of the Guaranty Trust, Wiggin of the Chase National, and Prosser of the Bankers Trust met at the House of Morgan and formed a pool to support prices. So high was the confidence of the financial world in their sagacity and power that even before they had decided upon anything, when simply the news went about that they were meeting, prices steadied, rallied; and by the time Richard Whitney, as the representative of the bankers pool, went on the floor of the Stock Exchange at half past one to bid for stocks, he hardly had to do more PANIC! 25 than go through the motions: when he offered to buy 10,000 shares of Steel at 205, he found only 200 shares for sale at that price. The gods of Wall Street still could make the storm to cease. Not till eight minutes past seven that evening, when night had darkened the windows of the brokers offices, did the tickers stop chattering out prices from the Exchange floor. Nearly thirteen million shares had changed hands. Wild rumors had been going about all day that exchanges had been closed, that troops had been called out in New York, that eleven speculators had committed suicide. Panic this was, and no doubt about it. But the bankers, it was hoped, had saved the day. For two more days the market, struggling, nearly held its own, while the lights burned all night in Wall Street as the brokers clerks struggled to get their records straight, and the telegrams calling for more margin went out by hun dreds and thousands. Then the avalanche began again; and this time the bankers could not conceivably have stopped it if they had tried. All they tried to do was to provide bids for stock where there were no bids at all: to give to the rout a semblance of order. On Tuesday, October 29, came the climax. The official statistics of the day gave the volume of trading as 16,410,030 shares, but no one knows how many sales went unrecorded in the yelling scramble to sell: there are those who believe that the true volume may have been twenty or even twenty- five million. Big and small, insiders and outsiders, the high- riders of the Big Bull Market were being cleaned out: the erstwhile millionaire and his chauffeur, the all-powerful pool operator and his suckers, the chairman of the board with his two-thousand-share holding and the assistant book keeper with his ten-share holding, the bank president and his stenographer. Here are a few of the losses for that single day in individual stocks and remember that they came on 26 SINCE YESTERDAY top of a long succession of previous losses: American Tele phone and General Electric, 28 points apiece; Westinghouse, 19 points; Allied Chemical, 35 points; North American, 2*j l /2 points; Auburn, 60 points; Columbian Carbon, 3834 points and these despite a sharp rally at the close! Said the sober Commercial & Financial Chronicle in its issue of November 2, "The present week has witnessed the greatest stock-market catastrophe of all the ages/ 1 Now at last there came a turn in the tide, as old John D. Rockefeller announced that his son and he were buying common stocks, and two big corporations declared extra dividends as a gesture of stubborn confidence. The Exchange declared a holiday and shortened the hours of trading to give the haggard brokers and sleepless clerks a chance to begin to dig themselves out from under the mass of ac cumulated work. Then prices went down once more, and again down. Day after day the retreat continued. Not until November 13 did prices reach their bottom for 1929. The disaster which had taken place may be summed up in a single statistic. In a few short weeks it had blown into thin air thirty billion dollarsa sum almost as great as the entire cost to the United States of its participation in the World War, and nearly twice as great as the entire national debt. President Hoover went into action. He persuaded Secre tary Mellon to announce that he would propose to the coming Congress a reduction in individual and corporate income taxes. He called to Washington groups of big bank ers and industrialists, railroad and public-utility executives, labor leaders, and farm leaders, and obtained assurances that capital expenditures would go on, that wage-rates would not be cut, that no claims for increased wages other than AFTERGLOW, 1930 27 those in negotiation would be pressed. He urged the gov ernors and mayors of the country to expand public works in every practicable direction, and showed the way by ar ranging to increase the Federal public-buildings expendi ture by nearly half a billion dollars (which at that time seemed like pretty heavy government spending). Hoover and his associates began at every opportunity to declare that conditions were "fundamentally sound," to predict a revival of business in the spring, to insist that there was nothing to be disturbed about. Thereupon the bankers and brokers and investors and business men, and citizens generally, caught their breath and looked about them to take stock of the new situation. Outwardly they became aggressively confident, however they might be gnawed inwardly by worry. Why, of course every thing was all right. The newspapers and magazines carried advertisements radiating cheer: "Wall Street may sell stocks, but Main Street is still buying goods." "All right, Mister- now that the headache is over, LET S GO TO WORK." It was in those days soon after the Panic that a new song rose to quick popularity a song copyrighted on November 7, 1959, when the stock market was still reeling: "Happy Days Are Here Again!" But it was useless to declare, as many men did, that nothing more had happened than that a lot of gamblers had lost money and a preposterous price-structure had been salu tarily deflated. For in the first place the individual losses, whether sustained by millionaires or clerks, had immediate repercussions. People began to economize; indeed, during the worst days of the Panic some businesses had come almost to a standstill as buyers waited for the hurricane to blow itself out. And if the rich, not the poor, had been the chief immediate victims of the crash (it was not iron-workers and sharecroppers who were throwing themselves out of win dows that autumn, but brokers and promoters), nevertheless 28 SINCE YESTERDAY trouble spread fast as servants were discharged, as jewelry shops and high-priced dress shops and other luxury busi nesses found their trade ebbing and threw off now idle employees, as worried executives decided to postpone build ing the extension to the factory, or to abandon this or that unprofitable department, or to cut down on production till the sales prospects were clearer. Quickly the ripples of un certainty and retrenchment widened and unemployment spread. Moreover, the collapse in investment values had under mined the credit system of the country at innumerable points, endangering loans and mortgages and corporate structures which only a few weeks previously had seemed as safe as bedrock. The Federal Reserve officials reported to Hoover, "It will take perhaps months before readjustment is accomplished." Still more serious was the factnot so ap parent then as later that the smash-up of the Big Bull Market had put out of business the powerful bellows of in flation which had kept industry roaring when all manner of things were awry with the national economy. The specula tive boom, by continually pouring new funds into the eco nomic bloodstream, had enabled Coolidge-Hoover pros perity to continue long after its natural time. Finally, the Panic had come as a shock a first shock to the illusion that American capitalism led a charmed life. Like a man of rugged health suffering his first acute illness, the American business man suddenly realized that he too was a possible prey for forces of destruction. Nor was the shock confined to the United States. All over the world, America s apparently unbeatable prosperity had served as an advertisement of the advantages of political democracy and economic finance capitalism. Throughout Europe, where the nations were loaded down with war debts and struggling with adverse budgets and snarling at one another over their respective shares of a trade that would not ex- AFTERGLOW, 1930 29 pand, men looked at the news from the United States and thought, "And now, perhaps, the jig is up even there/ . . . But if business was so shaken by the Panic that during the winter of 19219-30 it responded only languidly to the faith- healing treatment being prescribed for it by the Adminis tration, the stock market found its feet more readily. Pres ently the old game was going on again. Those pool operators whose resources were at least half intact were pushing stocks up again. Speculators, big and little, convinced that what had caught them was no more than a downturn in the busi ness cycle, that the bottom had been passed, and that the prosperity band wagon was getting under way again, leaped in to recoup their losses. Prices leaped, the volume of trad ing became as heavy as in 1929, and a Little Bull Market was under way. That zeal for mergers and combinations and holding-company empires which had inflamed the rugged individualists of the nineteen-twenties reasserted itself: the Van Sweringers completed their purchase of the Missouri Pacific; the process of amalgamation in the aviation industry and in numerous others was resumed; the Chase National Bank in New York absorbed two of its competitors and became the biggest bank in all the world; and the invest ment salesmen reaped a new harvest selling to the suckers five hundred million dollars worth of the very latest thing in investments shares in fixed investment trusts, which would buy the very best stocks (as of 1930) and hold on to them till hell froze. Who noticed that there was more zeal for consolidating businesses than for expanding them or initiating them? In the favorite phrase of the day, Prosperity was just around the corner. But a new day was not dawning. This light in the eco nomic skies was only the afterglow of the old one. What if the stock ticker recording Steel at 198^4, Telephone at 27414* General Motors at 1035^, General Electric at 9554, go SINCE YESTERDAY Standard Oil of New Jersey at 84% promised fair weather? Even at the height of the Little Bull Market there were breadlines in the streets. In March Miss Frances Perkins, Industrial Commissioner for New York State, was declaring that unemployment was worse than it had been since that state had begun collecting figures in 1914. In several cities, jobless men by the hundreds or thousands were forming pathetic processions to dramatize their plight only to be savagely smashed by the police. In April the business index turned down again, and the stock market likewise. In May and June the market broke severely. While Hoover, grimly fastening a smile on his face, was announcing, "We have now passed the worst and with continued unity of effort we shall rapidly recover/ and predicting that business would be normal by fall in this very season the long, grinding, heart-breaking decline of American business was beginning once more. 3 Not yet, however, had the Depression sunk very deeply into the general public consciousness. Of the well-to-do, in particular, few were gravely disturbed in 1930. Many of them had been grievously hurt in the Panic, but they had tried to laugh off their losses, to grin at the jokes about brokers and speculators which were going the rounds. ("Did you hear about the fellow who engaged a hotel room and the clerk asked him whether he wanted it for sleeping or jumping?" "No but I heard there were two men who jumped hand-in-hand because they d held a joint account!") As 1930 wore on, they were aware of the Depression chiefly as something that made business slow and uncertain and did terrible things to the prices of securities. To business men in "Middletown," a representative small mid- Western city, until 1932 "the Depression was mainly something they BATHTUB GIN AND THE CRIME WAVE 51 read about in the newspapers" despite the fact that by 1930 every fourth factory worker in the city had lost his job. In the country at large, nearly all executive jobs still held intact; dividends were virtually as large as in 1929; few people guessed that the economic storm would be of long duration. Many men and women in the upper income brackets had never seen a visible sign of this unemployment that they kept reading about until, in the fall of 1930, the International Apple Shippers Association, faced with an oversupply of apples, had the bright idea of selling them on credit to unemployed men, at wholesale prices, for resale at 5 cents apiece and suddenly there were apple-salesmen shivering on every corner. When the substantial and well-informed citizens who belonged to the National Economic League (an organiza tion whose executive council included such notables as John Hays Hammond, James Rowland Angell, Frank O. Lowden, David Starr Jordan, Edward A. Filene, George W. - Wickersham, and Nicholas Murray Butler) were polled in January, 1930, as to what they considered the "paramount problems of the United States for 1930," their vote put the following problems at the head of the list: i. Administra tion of Justice; 2. Prohibition; 3. Lawlessness, Disrespect for La^v; 4. Crime; 5. Law Enforcement; 6. World Peace and they put Unemployment down in eighteenth place! Even a year later, in January, 1931, "Unemployment, Economic Stabilization" had moved up only to fourth place, following Prohibition, Administration of Justice, and Lawlessness. These polls suggest not only how well insulated were the "best citizens* of the United States against the economic troubles of 1930, and how prone as Thurman Arnold later remarkedto respond to public affairs with "a set of moral reactions/ but also how deep and widespread had become the public concern over the egregious failure of Prohibition 3* SINCE YESTERDAY to prohibit, and over the manifest connection between the illicit liquor traffic and the gangsters and racketeers. Certainly the Prohibition laws were being flouted more generally and more openly than ever before, even in what had formerly been comparatively sober and puritanical Communities. As a "Middletown" business man told the Lynds, "Drinking increased markedly here in 27 and 28, and in 30 was heavy and open. With the Depression, there seemed to be a collapse of public morals. I don t know whether it was the Depression, but in the winter of 29^30 and in 30^3 1 things were roaring here. There was much drunkenness people holding bathtub gin parties. There was a great increase in women s drinking and drunkenness." In Washington, in the fall of 1930, a bootlegger was discov ered to have been plying his wares even in the austere pre cincts of the Senate Office Building. In New York, by 1931, enforcement had become such a mockery that the choice of those who wanted a drink was no longer simply between going to a speakeasy and calling up a bootlegger; there were "cordial and beverage shoppes" doing an open retail busi ness, their only concession to appearances being that bottles were not ordinarily on display, and the show windows re vealed nothing more embarrassing to the policeman on the beat than rows of little plaster figurines. By the winter of 1930-31, steamship lines operating out of New York were introducing a new attraction for the wholeheartedly bibu lousweek-end cruises outside the twelve-mile limit, some of them with no destination at all except "the freedom of the seas/ With every item of gangster news the killing of "]zk.e" Lengle of the Chicago Tribune; the repeated shootings of Legs Diamond in a New York gang war; the bloody rivalry between Dutch Schultz and Vincent Coll in the New York liquor racket; the capture of "Two-gun" Crowley (a youth who had been emulating gangster ways) after an exciting BATHTUB GIN AND THE CRIME WAVE 33 siege, by the police, of the house in which he was hiding out in New York s upper West Side; the ability of Al Capone, paroled from prison in Pennsylvania, to remain at large despite the universal knowledge that he had long been the dictator of organized crime in Chicago with every such item of news the public was freshly reminded that the gang sters were on the rise and that it was beer-running and alky-cooking * which provided them with their most reli able revenue. Preachers and commencement orators and after-dinner speakers inveighed against the "crime wave/ District Attorney Grain of New York said the racketeers "have their hands in everything from the cradle to the gravefrom babies milk to funeral coaches"; and President Hoover said that what was needed to combat racketeering was not new laws, but enforcement of the existing ones. Meanwhile sentiment against Prohibition was apparently rising: when the Literary Digest, early in 1930, took a straw vote of almost five million people, only 3014 per cent favored continuance and strict enforcement of the Eight eenth Amendment and Volstead Act; 29 per cent were for modification, and 401/2 per cent for repeal. Nor was the cause of righteous enforcement aided when Bishop James Cannon, Jr., of the Methodist Episcopal Church, South, who had been one of the most active of dry leaders, was discovered to the glee of the wets to have been speculat ing in the stock market under the auspices of a New York bucket shop. Perhaps the Wickersham Commission, when it came out of its long huddle over the law-enforcement problem, would throw a clear beam of light into this confusion? On the igth of January, 1931, it reported upon Prohibition and the confusion was thereby worse confounded. For, in the first place, the body of the Wickersham report contained explicit and convincing evidence that Prohibition was not working; in the second place, the eleven members of the Commission 3 4 SINCE YESTERDAY came to eleven separate conclusions, two of which were in general for repeal, four for modification, and five less than a majority, it will be noted for further trial of the Prohi bition experiment. And in the third place, the commission as a whole came out, paradoxically, for further trial. Confronted by this welter of disagreement and contradic tion, the puzzled citizen could be sure of only one thing: that the supposedly enlightened device of collecting in numerable facts and trying to reason from them to an inevitable conclusion had been turned into a farce. The headache of the Prohibition problem remained to vex him. There were other diversions aplenty to take people s minds off the Depression. There was, for instance, the $125,000,000 boom in miniature golf. People had been saying that what the country needed was a new industry; well, here it was in travesty. Garnet Carter s campaign to establish miniature golf in Florida during the winter of 1929-30 had been so sensationally successful that by the summer hundreds of thousands of Americans were parking their sedans by half-acre roadside courses and earnestly knocking golf balls along cottonseed greenswards, through little mouse holes in wooden barricades, over little bridges, and through drainpipes, while the proprietors of these new playgrounds listened happily to the tinkle of the cash reg ister and decided to go in for even bigger business in 1931 to lease the field across the way and establish a driving range, with buckets of balls and a squad of local boys as retrievers (armed with beach umbrellas against the white hail of slices and hooks). There was the incredible popularity of Amos n Andy on the radio, which made the voices of Freeman F. Gosden and Charles J. Correll the most familiar accents in America, set MINIATURE GOLF AND FREE WHEELING 35 millions of people to following, evening by evening, the fortunes of the Fresh Air Taxicab Company and the prog ress of Madam Queen s breach-of-promise suit against Andy and gave the rambunctious Huey Long, running for the Senate in Louisiana, the notion of styling himself the "King- fish" as he careened about the State with two sound-trucks to advertise him to the unterrified Democracy. (Long won the election, incidentally, though he had to kidnap and hold incommunicado on Grand Isle, till primary day was past, two men who had been threatening him with embarrassing lawsuits.) There was Bobby Jones s quadruple triumph in golf the British and American amateur and open championships which inspired more words of cabled news than any other individual s exploits during 1930, and quite outshone Max Schmeling s defeat of Jack Sharkey, the World s Series vic tory of the Philadelphia Athletics, the success of Enterprise in defending the America s Cup at Newport against the last of Sir Thomas Lipton s Shamrocks, and the winnings of Gallant Fox, Whichone, and Equipoise on the turf. Always the fliers could command excitement: Lindbergh, the prince charming of American aviators, inaugurated the air-mail route to the Canal Zone (and soon afterward became the father of a son destined for a tragic end); in September, 1930, Costes and Bellonte made the first successful westward point-to-point flight across the Atlantic, taking off at Paris in the "Question Mark" and landing at Long Island. There was the utterly fantastic epidemic of tree-sitting, which impelled thousands of publicity-crazy boys to roost in trees by day and night in the hope of capturing a "record," with occasional misadventures: a boy in Fort Worth fell asleep, hit the ground, and broke two ribs; the owner of a tree at Niagara Falls sued to have a boy removed from its branches, whereupon the boy s friends cut a branch from another tree, carried him to a new perch, and enabled him j6 SINCE YESTERDAY to continue his vigil; a boy in Manchester, New Hampshire, stayed aloft till a bolt of lightning knocked him down. To this impressive conclusion had come the mania for flagpole- sitting and Marathon-dancing which had characterized the latter nineteen-twenties. As the winter of 1930-31 drew on, there were other things to talk about than the mounting unemployment relief prob lem and the collapse of the speculatively managed Bank of United States in New York. Some of the new automobiles were equipped for "free wheeling/* (If you pulled out a button on the dashboard, the car would coast the moment you took your foot off the throttle. When you stepped on it again there was a small whirring sound and the engine took up its labor once more without a jolt.) The device was good for endless discussions: was it a help? did it save gas? was it safe? A lively backgammon craze was bringing comfort to department-store managers: however badly things might be going otherwise in the Christmas season, at least backgam mon boards were moving. While the head of the house sat at his desk miserably contemplating the state of his finances, his eighteen-year-old son was humming "Body and Soul" and trying to screw up his courage to fill his hip flask with the old man s gin for the evening s dance, where he dreamed of meeting a girl with platinum-blonde hair like Jean Har- low s in "Hell s Angels." Not everybody was worrying about the Depression yet. But Herbert Hoover worried, and worked doggedly at the Presidency, and saw his prestige steadily declining as the downward turn in the business index mocked his cheerful predictions, and thereupon worried and worked the harder. Things were not going well for the great economic engineer. The London Arms Conference, despite the most careful HOOVER IN TROUBLE 37 preparation during which Ramsay MacDonald had come to Washington to confer had produced a none-too-impres sive agreement: it set limitations" which the United States could not have attained without spending a billion dollars on new construction. Congress, applying itself to tariff revision, had got out of hand and had produced, not the limited changes which Hoover had half-heartedly advocated, but a new sky-high tariff bill which (in the words of Denna Frank Fleming) was virtually "a declaration of economic war against the whole of the civilized world," giving "notice to other nations that retaliatory tariffs, quotas, and embargoes against Amer ican goods were in order . . . notice to our war debtors that the dollar exchange with which they might make their payments to us would not be available." It had been obvious to anybody beyond the infant class in economics that the United States could neither have a flourishing export trade nor collect the huge sums owing it from abroad unless it either lent foreign countries the money with which to pay (which it had been doing in the nineteen-twenties and had now stopped doing) or else permitted imports in quantity. Over a thousand American economists, finding themselves in agreement for once (and for the last time during the nineteen-thirties) had protested against any general tariff increase. Hoover was no economic illiterate. But he was by nature and training an administrator rather than a poli tician, and he had been so outmaneuvered politically dur ing the long tariff wrangle that when the Hawley-Smoot Tariff Bill was finally laid on his desk in June, 1930, he signed it presumably with an inward groan. His Farm Board had been trying to sustain the prices of wheat and cotton by buying them on the market, and had succeeded by the end of the 1930 season in accumulating sixty million bushels of wheat and a million and a third bales of cotton, without doing any more than slow up the 38 SINCE YESTERDAY price decline. As if the farm situation were not bad enough already, a terrific drought had developed during the sum mer in the belt of land running from Virginia and Maryland on the Eastern seaboard out to Missouri and Arkansas (a precursor of other and more dreadful droughts to come); and when wells failed and crops withered in the fields, new lamentations arose to plague the man in the White House. Nor had these lamentations ceased when it became apparent that the continuing contraction of business threatened an ugly winter for the unemployed, whose numbers, by the end of 1930, had increased from the three or four millions "of the spring to some five or six millions. Since Hoover s first fever of activity after the Panic, he had been leery of any direct governmental offensive against the Depression. He had preferred to let economic nature take its course. "Economic depression," he insisted, "cannot be cured by legislative action or executive pronouncement. Economic wounds must be healed by the action of the cells of the economic body the producers and consumers them selves." So he stood aside and waited for the healing process to assert itself, as according to the hallowed principles of laissez-faire economics it should. But he was not idle meanwhile. For already there was a fierce outcry for Federal aid, Federal benefits of one sort or another; and in this outcry he saw a grave threat to the Federal budget, the self-reliance of the American people, and the tradition of local self-rule and local responsibility for charitable relief. He resolved to defeat this threat. Al though he set up a national committee to look after the unemployment relief situation, this committee was not to hand out Federal funds; it was simply to co-ordinate and encourage the state and local attempts to provide for the jobless out of state appropriations and local charitable drives. (Hoover was quite right, said those well-to-do people who told one another that a "dole" like the one in England would HOOVER IN TROUBLE 39 be "soul-destroying.") He hotly opposed the war veterans claim for a Bonusonly to see the "Adjusted Compensa tion" bill passed over his veto. He vetoed pension bills. To meet the privation and distress caused by the drought he urged a Red Cross campaign and recommended an appro priation to enable the Department of Agriculture to loan money "for the purpose of seed and feed for animals," but fought against any handouts by the Federal government to feed human beings. In all this Hoover was desperately sincere. He saw himself as the watchdog not only of the Treasury, but of America s "rugged individualism." "This is not an issue," he said in a statement to the press, "as to whether people shall go hun gry or cold in the United States. It is solely a question of the best method by which hunger and cold shall be pre vented. It is a question as to whether the American people, on one hand, will maintain the spirit of charity and mutual self-help through voluntary giving and the responsibility of local government as distinguished, on the other hand, from appropriations out of the Federal Treasury for such pur poses. ... I have . . . spent much of my life in fighting hardship and starvation both abroad and in the Southern States. I do not feel that I should be charged with lack of human sympathy for those who suffer, but I recall that in all the organizations with which I have been connected over these many years, the foundation has been to summon the maximum of self-help. ... I am willing to pledge myself that if the time should ever come that the voluntary agen cies of the country, together with the local and State govern ments, are unable to find resources with which to prevent hunger and suffering in my country, I will ask the aid of every resource of the Federal Government because I would no more see starvation amongst our countrymen than would any Senator or Congressman. I have faith in the American people that such a day will not come." 40 SINCE YESTERDAY Such were Hoover s convictions. But to hungry farmers in Arkansas the President who would lend them Federal money to feed their animals, but not to feed their children, seemed cillous. Jobless men and women in hard-hit industrial towns were unimpressed by Hoover s tributes to self-reliance. Even the prosperous conservatives failed him as whole hearted allies. Business was bad, the President seemed to be doing nothing constructive to help them, and though they did not know themselves what ought to be done or were hopelessly divided in their counsels, they craved a leader and felt they were not being given one. They groused; some of them called Hoover a spineless jellyfish. Meanwhile Charles Michelson, the Democratic party s publicity direc tor, was laying down a diabolically well-aimed barrage of press releases and speeches for Congressional use, taking advantage of every Hoover weakness to strengthen the Democratic opposition; and the President, suffering from his inability to charm and cajole the Washington corre spondents, was getting a bad press. The Congressional and State elections of November, 1930, brought Democratic victories, confronting Hoover with the prospect, ere long, of a definitely hostile Congress. Those elections brought, incidentally/ a smashing victory in New York State to Governor Franklin D. Roosevelt, who was re-elected by the unexpectedly large plurality of 725,000. The afternoon following the election, Roosevelt s State chairman, an ex-boxing commissioner named James A. Farley, produced with the aid of Roosevelt s political mentor, Louis McHenry Howe, a statement which he was afraid the Governor might not like. It said: "I do not see how Mr. Roosevelt can escape being the next presidential nominee of his party, even if no one should raise a finger to bring it about." Having issued the statement at the Hotel Biltmore in New York, Farley telephoned the Governor in Albany to confess what he had done. Roosevelt laughed and WHAT DID IT MEAN? 41 said, "Whatever you said, Jim, is all right with me." Here too, had Hoover but known it, was another portent for him. But things were bad enough even without borrowing trouble from the future. In midwinter there was an encour aging upturn in business, but as the spring of 1931 drew on, the retreat began once more. Hoover s convictions were being outrun by events. During all this time, many men were earnestly citing the hardships suffered in the depressions of 1857 an< ^ 1 ^75 an d 1893. as proofs that nothing ailed America but a downswing in the business cycle. The argument looked very reasonable but these men were wrong. Something far more profound than that was taking place, and not in America alone. The nineteenth century and the first few years of the twentieth century had witnessed a remarkable combination of changes which could not continue indefinitely. Among these were: 1. The rapid progress of the industrial revolution which brought with it steam power, and then gasoline and electric power and all manner of scientific and inventive miracles; brought factory production on a bigger and bigger scale; drew the population off the farms into bigger and bigger cities; transformed large numbers of people from independ ent economic agents into jobholders; and made them in creasingly dependent upon the successful working of an in creasingly complex economy. 2. A huge increase in population. According to Henry Pratt Fairchild, if the population of the world had continued to grow at the rate at which it was growing during the first decade of the present century, at the end of 10,000 years it would have reached a figure beginning with 221,848 and followed by no less than 45 zeros. 42 SINCE YESTERDAY 3. An expansion of the peoples of the Western world into vacant and less civilized parts of the earth, with the British Empire setting the pattern of imperialism, and the United States setting the pattern of domestic pioneering. 4. The opening up and using up of the natural resources of the world coal, oil, metals, etc. at an unprecedented rate, not indefinitely continuable. 5. A rapid improvement in communication which in effect made the world a much smaller place, the various parts of which were far more dependent on one another than before. 6. The rapid development and refinement of capitalism on a bigger and bigger scale, as new corporate and financial devices were invented and put into practice. These new devices (such as, for example, the holding company), coupled with the devices added to mitigate the cruelties of untrarn- meled capitalism (such as, for example, labor unionism and labor legislation), profoundly altered the working of the national economies, making them more rigid at numerous points and less likely to behave according to the laws of laissez-faire economics. Which of these phenomena were causes, and which were effects, of the changes in the economic world during the century which preceded 1914, is a matter of opinion. Let us not concern ourselves with which came first, the hen or the egg. The point is that an immense expansion and complica tion of the world economy had taken place, that it could not have continued indefinitely at such a pace, and that as it reached the point of diminishing returns, all manner of stresses developed. These stresses included both interna tional rivalries over colonies (now that the best ones had been exploited and were incidentally no longer paying their mother countries so well) and internal social conflicts over the division of the fruits of industry and commerce. The World War of 1914-18, brought about by the inter- WHAT DID IT MEAN? 43 national rivalries, had left Europe weakened and embit tered, with hitherto strong nations internally divided and staggering under colossal debts. Presently there were ominous signs that the great age of inevitable expansion was over. The population increase was slowing up. The vacant places of the world were largely pre empted. The natural resources were limited and could hardly be exploited much longer so quickly and cheaply. As the economic horizons narrowed, the struggle for monopoly of what was visibly profitable became more intense. Nations sought for national monopoly of world resources; corporate and financial groups sought for private monopoly of na tional resources and national industries. Meanwhile each national economy became more complex, less flexible, and more subject to the hazards of bankruptcy by reason of unbearable debts. One way of expansion still remained open. Invention did not stop; the possibilities of increased comfort and security through increasingly efficient mechanical production (and through improvement in the means of communication) re mained almost limitless. But the economic apparatus which was at hand, and men s mental habits and outlook, were ad justed to the age of pioneering expansion rather than to reliance on increasing efficiency alone; and what sort of eco nomic apparatus the new age might require no one knew. During the nineteen-twenties the United States, com paratively unhurt by the war and adept at invention and mechanization, had continued to rush ahead as if the age of pioneering expansion were not over. Still, however, it was a victim of the vices of its pioneering youth an opti mistic readiness to pile up debts and credit obligations against an expanding future, a zest for speculation in real estate and in stocks, a tendency toward financial and cor porate monopoly or quasi-monopoly which tended to stiffen a none-too-flexible economy. These vices combined to undo 44 SINCE YESTERDAY it. As Roy Helton remarks in this connection, when one is grown up one can no longer indulge with impunity in the follies of youth. While the bellows of speculation and credit inflation blew, the fires of prosperity burned brightly; but once the bellows stopped blowing, the fires dimmed. And when they dimmed in the United States, they dimmed all the more rapidly in Europe, where since the war they had burned only feebly. As the contraction of one national economy after another set in, men became frantic. The traditional economic laws and customs no longer seemed to work; the men of learning were as baffled as anybody else; nobody seemed to know the answer to the economic riddle. Russia offered an alterna tive set of laws and customs, but enthusiasm for the Marx ian way as exemplified in Russia was limited. What else was there for men to fasten their hopes upon? Nobody knew, for this emergency was unprecedented. So it hap pened that the world entered upon a period of bewilder ment, mutual suspicion, and readiness for desperate meas ures. Nor was the United States, falling from such a pinnacle of apparent economic success, to escape the confusion and dismay of readjustment. Chapter Three DOWN, DOWN, DOWN JUNE, 1931 : twenty months after the Panic. The department-store advertisements were begin ning to display Eugenie hats, heralding a fashion en thusiastic but brief; Wiley Post and Harold Gatty were pre paring for their flight round the world in the monoplane " Winnie Mae"; and newspaper readers were agog over the finding, on Long Beach near New York, of the dead body of a pretty girl with the singularly lyrical name of Starr Faithfull. On the New York stage, in June, 1931, Katharine Cor nell was languishing on a sofa in "The Barretts of Wim- pole Street," de Lawd was walking the earth in "The Green Pastures," and the other reigning successes included "Grand Hotel" and "Once in a Lifetime." At the movie theatres one might see African lions and hear native tom-toms in "Trader Horn," or watch Edward G. Robinson in "Smart Money" or Gloria Swanson in "Indiscreet." As vacation ists packed their bags for the holidays, the novel that was most likely to be taken along was Pearl S. Buck s The Good Earth, which led the best-seller lists. The sporting heroes of the nineteen-twenties had nearly all passed from the scenes of their triumphs: Bobby Jones had turned profes sional the preceding fall; Tilden had lost the tennis cham pionship the preceding summer; Dempsey and Tunney had long since relinquished their crowns, and boxing was falling into uncertain repute; Knute Rockne, the Notre Dame football coach, had recently been killed in an air- 45 46 SINCE YESTERDAY plane crash; and even Babe Ruth was no longer the undis puted Sultan of Swat: Lou Gehrig was now matching him home run for home run. During that month of June, 1931, there was a foretaste and a sour oneof many a financial scandal to come, when three officers of the Bank of United States were con victed by a jury in New York, after shocking disclosures of the mismanagement of the bank s funds during the specula tive saturnalia of 1928 and 1929. There was the inception of a romance that was to shake an empire to its founda tions: on June 10 a young American woman living in London, a Mrs. Ernest Simpson, was presented at Court and met for the first time the Prince of Wales. At Hopewell, New Jersey, the scene was being unwittingly set for the most tragic crime of the decade: Colonel Lindbergh s new house described in newspaper captions as "A Nest for the Lone Eagle" was under construction, the scaffolding up, the first floor partly completed. During that month a young man from St. Louis came on to New York, with arrangements all made, as he sup posed, for the transfer to him of a seat on the New York Stock Exchange. But one detail had been neglected: the Exchange was virtually a club, and a candidate for mem bership must have a proposer and seconder. There was some delay before the young man from St. Louis, whose name was William McC. Martin, Jr., could be proposed and seconded, for he did not know anybody on the Ex change. The gentlemen of Wall Street, having no inkling of the changes in store for them during the next few years, would have been thunderstruck if they had been told that before the decade was out, this unknown youth would be President of an Exchange operating under close govern mental supervision. The President in 1931 was Richard Whitney, hero of the bankers foray against the Panic; on April 24, 1931, Mr. Whitney had made an impressive IN JUNE, 1931 47 address before the Philadelphia Chamber of Commerce on "Business Honesty." Prices on the Exchange had been going down badly and brokers were pulling long faces, but there was still a little gravy left for those who knew what the next move would be in Case Threshing or Auburn Auto. On a Sunday morning in June, 1931, two men spent some busy hours in a small room in a very big house in Hyde Park, New York, poring over maps of the United States and railroad timetables and lists of names. They were the Governor of New York, Franklin D. Roosevelt, who had been so impressively re-elected the preceding No vember, and the Chairman of his Democratic State Commit tee, James A, Farley. Mr. Farley had conceived the idea of attending the forthcoming Elks Convention at Seattle, and he and Governor Roosevelt were planning how he might make the most of the expedition, covering eighteen states in nineteen days and talking with innumerable Dem ocratic leaders, with most of whom he had already been corresponding profusely and cordially. The object of this prophetic journey, needless to say, was to sound out Demo cratic sentiment in the West and to suggest as disarmingly as possible that the leaders might do well to unite behind .Governor Roosevelt in 1932. And it was during that month of June, 1931, that Presi dent Hoover gave up waiting for economic conditions to improve of their own accord and began his real offensive against the Depression began it with a statesmanlike stroke in international finance which seemed briefly to be vic torious, and which failed in the end only because the proc esses of economic destruction were too powerful and too far developed to be overcome by any weapon in the Hoover armory. On the hot afternoon of Saturday, June 20, Hoover proposed an international moratorium in war reparations and war debts. 48 SINCE YESTERDAY 2 For a long time past, as business slowed up in Europe, a sort of creeping paralysis had been afflicting European finance. Debts national and private which had once seemed bearable burdens had now become intolerably heavy; new financial credits were hardly being extended ex cept to shore up the old ones; prices fell, anxiety spread, and the whole system slowed almost to a standstill. During the spring of 1931 the paralysis had become acute. It is ironical, in retrospect, to note that what made it acute was an attempt on the part of Germany and Austria to combine for limited economic purposes to achieve a customs union and the fierce opposition of the French to any such scheme. Anything which might bring Germany and Austria together and strengthen them was anathema to the French, who little realized then the possible conse quences of Central European bankruptcy. Already the biggest bank in Austria, the Credit Anstalt, had been in a tight fix. When the altercation over the customs union still further increased the general uncer tainty, the Credit Anstalt had been obliged to appeal to the none-too-solvent Austrian government for aid. Imme diately panic was under way. Quickly it spread to Ger many. In May and June, 1931, capital was fleeing both countries, foreign loans were being withdrawn, and a gen eral collapse seemed imminent a collapse which might cause the downfall of Germany s democratic government. For that cloud on the German horizon which in 1929 had seemed no bigger than a man s hand was now growing fast: Hitler s Brown Shirts were becoming more and more powerful. On the sixth of May, 1931, when few Americans had the faintest idea of how critical the European financial situa- TICKER TAPE FOR BOBBY JONES He disentangles himself from a streamer as he returns to New York on July a, 1930, after winning two British golf champion ships. (Note Mrs. Jones s helmet-like hut and the almost perpen dicular windshield of the car.) A cms %M INFORMATION AS TO THE WHEREABOUTS OF OF HOPWELL, N. J. SON OF COL. CHAS. A. LINDBERGH World-Famous Aviator . This was his in ft* J n 8 on Tuesday* I f !S32 DESCRIPTION: 20 months Wain 2| to 30 ibs; Ey0s f Height* 2S fetches Complexion^ impie In etiter of in 0fte~pic eovtrali Ail TO . H, II, SHWAC0IF, ntCKTO*, . J., , If OKWttJU 91. i. LINDBERGH KIDNAPPING POSTER Sent to police chiefs in 1400 American communities in March, 1932 THE HOOVER MORATORIUM 49 tion was becoming, the American Ambassador to Germany had dined with President Hoover at the White House; and since then the President, fearing that a collapse in Europe might have grave consequences to the United States, had been turning over in his mind the idea of an interna tional moratorium of postponing for a year all payments on inter-governmental debts, including the reparations which Germany was then obliged to pay and the war debts owed to the United States by her former European allies. Mr. Hoover had then begun a long period of consultation with members of his Cabinet, with Federal Reserve offi cials, with ambassadors, with bankers. Always a terrific worker at his desk before eight-thirty, taking only fifteen minutes for lunch unless he had White House guests, and often burning the lights in the Lincoln study late into the night he now concentrated all the more fiercely. Before long he had drafted tentatively a moratorium statement, laboring over it so grimly that he broke pencil point after pencil point in the writing. Yet he had delayed issuing it. The dangers of the scheme were apparent. Congress might object, and this would be fatal. Other nations, particularly proud and jealous France, might object. The budget-balancing on which he had set his heart might be imperiled by cutting off the debt pay ments to America. Furthermore such a proposal, by calling attention to the international panic, might accentuate rather than ease it. Meanwhile the storm in Europe spread. Hoover s advisers were pleading with him to act, but still he would not. He waited. In mid-June he was scheduled to go on a speaking trip through the Middle West (which included the somewhat dubious pleasure of speaking at the dedication of a memorial to President Harding); he went off with the proposal yet unmade, while almost hourly the inside news was relayed to him from Washington: the European collapse was accelerating. 50 SINCE YESTERDAY By the time he got back to Washington it was clear that he must act at once or it would be much too late. He began telephoning senators and representatives to get their ad vance approval. Congress was not sitting, and the telephone operators had to catch for him men widely dispersed all over the country, on speaking trips, on motor trips, on golf courses, on fishing trips deep in the woods; one lawmaker, hearing that the White House wanted him, called it from a Canadian drugstore; another was rea