Gustavus Myers, History of the Great American Fortunes
It could not be claimed that, in terms of their political-economic beliefs, there were striking differences between the Presidential candidates of the two major parties in 1924.
The Democratic Party candidate was the handsome, soft-spoken, Wall Street attorney, John W. Davis, former U. S. Solicitor General and one-time Ambassador to Great Britain, whom the King of England had characterized as “one of the most perfect gentlemen I have ever met.” Once regarded as an outstanding Liberal, Davis — now a director in the United States Rubber Company, the National Bank of Commerce, the Santa Fe Railroad and other such concerns —had this to say of himself:
I have a fine list of clients. What lawyer wouldn’t want them? I have J. P. Morgan & Company, the Erie Railroad, the Guaranty Trust Company, the Standard Oil Company, and other foremost American concerns on my list. I am proud of them. They are big institutions and as long as they ask for my service for honest work, I am pleased to work for them. Big Business has made this country what it is. We want Big Business . . .
Calvin Coolidge, the Republican candidate, characteristically expressed the same thought in more succinct language. “The business of America,” said Coolidge, “is business.”
While the campaigns of both candidates were generously subsidised by big-moneyed interests, the leading industrialists and financiers were more sympathetically inclined toward Coolidge’s candidacy. Henry Ford summed up their feelings: “The country is perfectly safe with Calvin Coolidge. Why change?”
Not a few Americans, however, regarded both candidates with a jaundiced eye. Members of the Farmer Labor Party and the Conference for Progressive Political Action vigorously denounced the tweedledum- tweedledee character of the Republican and Democratic Parties and the ever-growing Government control by giant trusts and monopolies. Their candidate for President was Robert M. La Follette, popularly known as “Fighting Bob,” the shaggy-haired, elderly, deeply courageous if somewhat quixotic senator from Wisconsin, who tirelessly crusaded against the mounting “encroachment of the powerful few upon the rights of the many.”
Few political wiseacres gave Senator La Follette a chance of being elected. But his words were sufficiently far-reaching and his following large enough to cause considerable alarm in the inner circles of both major parties, and an intensive, lavishly financed campaign of slander and vilification was organized to discredit La Follette and his running mate, Senator Burton K. Wheeler of Montana.1 Leading Republicans and Democrats alike accused the two senators of being the “tools of Bolshevik agents,” and charged that “Moscow gold” was swelling their campaign funds. Newspaper advertisements championing the candidacy of “Silent Cal” featured the slogan, “I like Silence and Success better than Socialism and Sovietism”2
If Coolidge was silent, money talked. Subsequent estimates of the Republican campaign expenditures ranged from $15,000,000 to $30,000,000. The dour, pinch-faced Republican candidate, whose thoughts were as sparse as his mode of speech, was returned to office by an overwhelming majority of the votes.
Far more surprising than Coolidge’s victory was the number of votes cast for Senator La Follette. Despite the propaganda drive against LaFollette, a badly mismanaged and meagrely financed campaign and the fact his name was not even on the ballot in a number of states, approximately one out of every six persons who went to the polls voted for “Fighting Bob.” La Follette’s total vote was 4,822,000.
Impressive as was this demonstration of widespread opposition to the Government’s post-war policies, it failed to divert the statesmen and financiers from the disastrous course upon which they had embarked.
“I am sure that Coolidge would make a good President. I think he would make a great one . . .” Dwight W. Morrow, partner in the firm of J. P. Morgan & Company had written in a letter to a friend as early as 1920.
There was nothing in Coolidge’s conduct as President to diminish Dwight Morrow’s high regard for him . . .
A dominant theme in President Coolidge’s public utterances was the “Power of the Moral Law.” “We do not need a more material development, we need a more spiritual development,” Coolidge emphasized. “We do not need more intellectual power, we need more moral power . . .”
At the same time, the President showed a statesmanlike flexibility in the application of his Moral Law by dismissing the Teapot Dome and other unsavoury Harding scandals as “errors of judgment” . . .*3
President Coolidge’s views on labor problems remained what they had been when, as a member of the Massachusetts State Senate, he described strike leaders as “socialists and anarchists” who “do not want anybody to work for wages,” and stated: “If any man is out of a job it’s his own fault . . . The State is not warranted in furnishing employment for anybody so that persons may work.”
With Dwight Morrow and another Morgan partner, Thomas Cochran, among the President’s most intimate advisers, the Coolidge Administration sedulously cultivated the growth of trusts and monopolies. In the words of William E. Humphries, a newly appointed member of the Federal Trade Commission:
The Interstate Commerce Commission has become the bulwark instead of the oppressor of the railways . . . The President, instead of scoffing at big business, does not hesitate to say that he purposes to protect the American investor wherever he may rightfully be. The Secretary of Commerce [Herbert Hoover], far from appealing to Congress for legislation regulatory of business, allies himself with the great trade associations and the powerful corporations.
Secretary of the Navy Curtis Wilbur defined the foreign policy of the Coolidge Administration in unusually frank language, during a speech before the Connecticut Chamber of Commerce:
Americans have over twenty millions of tons of merchant shipping to carry the commerce of the world, worth three billion dollars. We have loans and property abroad, exclusive of government loans, of over ten billions of dollars. If we add to this the volume of exports and im- ports for a single year— about ten billion dollars— we have an amount almost equal to the entire property of the United States in 1868 and if we add to this the eight billion dollars due us from foreign governments, we have a total of $31,000,000,000, being about equal to the total wealth of the nation in 1878 . . . These vast interests must be considered when we talk of defending the flag . . . We fought not because Germany invaded or threatened to invade America but because she struck at our commerce on the North Sea . . . To defend America we must be prepared to defend its interests and our flag in every corner of the globe . . .
To further such American “interests,” hundreds of millions of dollars in public and private loans were streaming across the Atlantic into the vaults of German industrialists and bankers who were secretly rearming the Reich and subsidizing Hitler’s rapidly growing National Socialist Party. American-owned auto, electrical equipment, aircraft and other plants were springing up throughout Europe. General Electric was assuming the dominant interest in the German electrical combine, A.E.G., one of the major contributors to the Nazi Party fund. Standard Oil was concluding cartel agreements with I. G. Farbenindustrie. General Motors was negotiating for control of the German auto firm of Adam Opel, A. G. Enormous sums were being advanced to II Duce’s Italy, and large investments made in White Guard dictatorships in Poland, Hungary, Bulgaria, Finland and Romania.
The golden threads of Wall Street webbed the world. By 1926, Commerce and Finance was able to make the impressive claim that the United States had “a mortgage on the lives of both the living and the unborn in practically every nation of Europe, except Russia.”4
In the opinion of many American statesmen and business leaders, mankind was entering an era of American world domination. Reflecting this viewpoint, Ludwell Denny, chief editorial writer of the Scripps-Howard Newspaper Alliance, wrote in his book, America Conquers Britain:
The “feeling” of victory is on America’s side. It is America’s “day.” The devastating “will to win” so characteristic of youth, and the energy and daring which flow from it, drive America forward. The sense of “manifest destiny” is contagious . . .
The “Americanization” of Europe and the far places of the earth” advances . . . We were Britain’s colony once. She will be our colony before she is done, not in name but in fact. Machines gave Britain power over the world. Now better machines are giving America power over the world.
What chance has Britain against America? Or what chance has the world?
At home business boomed as never before. Radios, electrical appliances, cars, clothing, furniture, cosmetics, refrigerators and other goods poured in an unending torrent from the nation’s machines. New factories and office buildings mushroomed on every side. “Coolidge Prosperity” was the slogan of the day . . .
Not everyone, of course, had the money to buy what he wanted; but nearly everyone bought. They purchased on credit, and paid the “easy way,” on “easy terms.” In 1926, more than one-sixth of the 40 billion sales volume in America was instalment buying.
Mammon was king and the mores were those of the stock market. The American people, wrote Senator George Norris in his autobiography. Fighting Liberal, had been “brought … to their knees in worship at the shrine of private business and industry.” A Mellon, Hoover, Rockefeller, Dawes or Morgan was regarded as oracle, sage, scientist, dreamer-of-great-dreams, doer-of-great-deeds and statesman, all rolled into one. The businessman had become, in Stuart Chase’s phrase, “the dictator of our destinies.”
A billboard in New York City read: “Come to Church. Christian Worship Increases Your Efficiency.” A pamphlet issued by the Metropolitan Insurance Company, entitled Moses, Persuader of Men, portrayed the Israelite leader as “one of the greatest salesmen and real-estate promoters that ever lived.” One of the leading best- sellers, Bruce Barton’s The Man Nobody Knows, described how Jesus Christ had:
‘…picked up twelve men from the bottom ranks of business and forged them into an organization that conquered the world . . . Nowhere is there such a startling example of executive success as the way in which that organization was brought together . . . [Jesus] was the founder of modern business.
With profits seemingly limitless, and stocks rocketing to astronomical new heights, the millennium of capitalism appeared to have arrived.
“The great wealth created by our enterprise and industry, and saved by our economy,” proudly declared President Coolidge, “has had the widest distribution among our people, and gone out in a steady stream to serve the charity and business of the world.”
In an article published in Colliers magazine, the well-known journalist and Ford publicist, Samuel Crowther, exulted:
That there is no poverty other than voluntary or due to accident or disease, and this is negligible.
That we are, excepting in a few sections, solidly prosperous, with a buying power beyond comprehension.
That the standard of living is very high, but without a leaning toward extravagance . . .
That those who complain of hard times are those who fail to adjust themselves to a new order of things in retailing, manufacturing or agriculture.
That there is nothing of what we used to call radicalism. That nothing can wreck our ship excepting ingeniously bad management in government or in industry.
Samuel Crowthe’s article was entitled: “Aren’t We All Rich Now?”5
In 1929 the Federal budget totalled four and a half billion dollars. That same year, according to Wade H. Ellis, former Assistant U.S. Attorney General and head of the American Bar Association, the nation’s crime budget was thirteen billion dollars.
Crime had become a leading business in the United States. In an article in the North American Review entitled “Our Biggest Business— Crime,” the retired New York Police Commissioner, Richard E. Enright, wrote:
The inescapable truth is that the annual total of the country’s criminals, of whom 400,000 are in cells and a million at liberty is the most disturbing feature of our social order, the gravest problem confronting America.
In 1928 alone, stated Enright, some 12,000 Americans had been killed by criminals, a number equalling ten per cent of the nation’s total losses in the Great War . . .
The trades of mayhem, arson, vandalism and murder were being widely pursued on a practical cash basis. Colliers magazine noted editorially:
Commercial rates have been fixed, for bombers and gunmen. A simple bombing in some cities can be had for as little as S50, a cold-blooded murder by machine-gunners may bring $10,000.
From bootlegging, gambling, prostitution and dope peddling, the nation’s racketeers had branched out into almost every field of business. The New York World reported in the late twenties that some 250 industries in New York City were partially or completely controlled by gangsters; the yearly “take” of these gangsters was estimated at between $200,000,000 and $600,000,000. “It would appear . . .” observed Thomas Grain, New York County District Attorney, “that they have their hands in everything from the cradle to the grave, from baby’s milk to funeral coaches.”
“We’re big business without high hats,” Dion O’Banion, Chicago gang Czar known to millions as the mobster who loved flowers, told a newsman shortly before being shot down by rival gangsters. His funeral was attended by thousands of citizens; there were twenty- five truckloads of floral wreaths; and his coffin cost $10,000 . . .
Of Al Capone, the squat, scar-faced former pimp who had be- came absolute monarch of a criminal empire grossing $100,000,000 a year, it was afterwards reported by Life magazine: “he wholly or largely controlled the municipal governments of Chicago, Cicero, Burnham and Stickney, 111.” “Men like Al Capone and Arnold Rothstein and Bugs Moran,” wrote Louis Adamic, “are figures of national prominence, ‘big men’ in the same sense that Henry Ford and Charles Schwab are big men.”
Like other “big men” in America, Al Capone was deeply disturbed by radical social trends. At his headquarters in the Lexington Hotel in Chicago, Capone solemnly warned Cornelius Vanderbilt, Jr., who was interviewing him for Liberty magazine:
Bolshevism is knocking at our gates. We can’t afford to let it in. We have got to organize ourselves against it, and put our shoulders together and hold fast. We must keep America whole and safe and unspoiled. We must keep the worker away from the red literature and red ruses; we must see that his mind remains healthy.
“The people know,” declared Walter Lippmann, “that they are beset by organized criminals who operate on a scale that has horrified the world. They know that unless they master this evil it will master them.”
Lippmann was referring to the “established institution of racketeering” of the “criminal underworld.” But during the era of post- war prosperity, a far more deeply entrenched and pernicious form of crime wracked the American nation.
1. At the time, Senator Wheeler was an outspoken foe of monopoly and reaction In later years, Wheeler himself became one of the most reactionary members of the Senate.
2. Actually, the Communist Party did not support La Follette, but ran its own presidential candidate, William Z. Foster.
3. The only change Coolidge made in the Cabinet after Harding’s death was in the replacement of Attorney General Harry M. Daugherty by Harlan Fiske Stone, former dean of the Columbia Law School.
As Attorney General, Stone effected an extensive shake-up in the Justice Department. The shake-up, however, did not eliminate all of those officials who had been prominently involved in the Palmer raids and other post-war machinations of the Justice Department. While William J. Bums, chief of the Bureau of Investigation, was removed from office, his place was taken by his former assistant and ex-head of the Bureau’s General Intelligence Division, J. Edgar Hoover.
In a statement reprimanding the Bureau of Investigation for its “anti-radical” operations, Attorney General Stone declared shortly after taking office: “The Bureau of Investigation is not concerned with political or other opinions of individuals. It is concerned only with such conduct as is forbidden by the laws of the United States. When a police system goes beyond these limits it is dangerous to the proper administration of justice, and to human liberty . . .”
Dexterously setting his sails to the new wind, J. Edgar Hoover acknowledged in a memorandum to Assistant Attorney General William J. Donovan on October 18, 1924: “It is, of course, to be remembered that the activities of Communists and other ultra-radicals have not up to the present time constituted a violation of the federal statutes, and, consequently, the Department of Justice, theoretically, has no right to investigate such activities as there has been no violation of federal laws.” It was a bitter pill for J. Edgar Hoover to swallow; but he was willing to bide his time and await a more propitious day when he might resume his old “anti-radical” activities. See Books Three and Four for data on Hoover’s subsequent operations.
4. The Dawes Plan in 1924 and the Young Plan in 1929 arranged for huge loans to Germany. A large portion of the funds thus obtained were used by German industrialists to finance their secret rearmament program, and to build the Hitler movement.
A committee of experts established by the Allied Reparations Commission drew up the Dawes Plan. The committee functioned under the supervision of General Charles G. Dawes, Chicago financier, director of the budget under Harding, and vice-president during Coolidge’s second term. A leading member of the committee of experts was Owen D. Young, chairman of the board of the Morgan-controlled General Electric Company. Morgan and his associates floated more than $200,000,000 of the international gold loan borrowed by Germany under the Dawes Plan in the United States.
The second international committee of experts, which drafted the Young Plan in 1929 to replace the Dawes Plan, operated under the chairmanship of Owen D. Young and included J. P. Morgan himself as an associate.
Other Americans who played an important role in projecting the Dawes and Young Plans were Herbert Hoover; the Wall Street lawyer, John Foster Dulles; and the banker, W. Averell Harriman. The chief negotiator for Germany was Hjalmar Schacht, then head of the Reichsbank and later Hitler’s Minister of Economics.
In channelling funds from the United States into Germany (during 1924-1929, Wall Street sank approximately four billion dollars into Germany), a leading role was played by the Wall Street banking firm of Dillon Read and Company, among whose directors were William F. Draper and James V. Forrestal.
For similar operations on the part of Herbert Hoover, John Foster Dulles, W. Averell Harriman and James V. Forrestal after the Second World War, see Book Four.
5. Actually, for the great majority of Americans “Coolidge Prosperity” was a cruelly elusive mirage.
There was widespread poverty in the rural areas, with bankruptcies and foreclosures mounting among the farmers. The number of unemployed in the land hovered between two and four million. In 1929, at the peak of “prosperity” some 28,000,000 Americans failed to earn enough money to pro- vide them with a minimum decent standard of living; and in four southern states Negro workers had an average income of less than $300.
“At 1929 prices,” reported the Brookings Institute, “a family income of $2,000 may perhaps be regarded as sufficient to supply only basic necessities.” And these, according to the Brookings Institute, were the incomes of American families that year:
Nearly 6 million families, or more than 21 per cent of the total, had incomes less than $1,000. About 12 million families, or more than 42 per cent, had incomes less than $1,500.
Nearly 20 million families, or 71 per cent, had incomes less than $2,500. The economist. Professor Paul Henry Nystrom of Columbia University, estimated in his book, Economic Principles of Consumption, that with the Boom at its zenith, 1,000,000 Americans were public charges; another 1,000,000, broken in health and spirit, were “unemployable”; a minimum of 7,000,000 were living under such circumstances that the least emergency meant for them a choice between starving or accepting charity; and the incomes of another 12,000,000 provided them with a “bare subsistence.”