Forgotten Man, The (14 page)

The money drought also meant that it was harder to borrow to cover one’s losses. Worst of all, however, was that it slowed growth. In good times, the housing industry and the average family buoyed one another up. Now people were seeing the nightmare of the cycle in reverse. Home construction was down, hurting families; families were down, hurting home construction. Home equity, for example, was one of the most important ways that members of the construction trade financed the opening of new businesses. Unable to borrow against their homes, they could not work. “Very often,” a witness testified of a would-be small businessman, “he is absolutely prohibited from going into debt because the banks, speaking generally, will not give him any mortgage accommodation under any circumstances—not even a 20 percent mortgage on his proposed home. That means, to my mind, a throttling of the building trades, the building industry, labor, and everything else that goes into the building game. They are strangling today.” And what good could barter money do the home owner if the bank would not accept it for a mortgage?

Other components of the downturn worsened the deflation. Each day proved the Cassandra economists right anew: in the two years following Hoover’s Smoot-Hawley legislation, U.S. imports dropped more than 40 percent. Though people were unable to quantify the change at the time, economists later estimated that a share of that decline was due to the tariff. Retaliation by other countries was taking its toll. Unemployment had risen in 1930. Now, by 1931, the guess was that the national figure was something like 16 percent and rising again. In New York alone, there were 14,000 or 15,000 homeless men. Others were not officially homeless but still walked the streets evenings. Wilson’s Canada venture did not play out. He soon found himself back in Brooklyn, wandering about. His wife’s mother died, but he missed the funeral, going on another bender.

Writing in the
New Republic
, Bruce Bliven had already noted that every man was different. Some men could bear to spend a night in a shelter without the event bringing them down. “But there are others,” Bliven wrote, “who pay dearly. This winter differs from previous
ones in the exceptionally high number of men who have never before had this sort of experience, for whom it is a personal tragedy too deep for words.”

By far the hardest hit of any urban group were the blacks of the North. Now the unemployment rates between the races diverged. In the cities, something like one in two blacks was unemployed. Women, whose work as domestics often provided the most important family income, were similarly unemployed. In Harlem, a street became known as “the lung block” because its tuberculosis rate was high. Many churches did not know what to do for their parishioners: “God is mad with the people,” one minister in New York summed up. Blacks, the historic stalwarts of the Republican Party, began to feel not only economic but also political desperation. “My friends, go turn Lincoln’s picture to the wall. That debt has been paid in full,” ordered one black newspaper’s editor.

Hoover still did not entirely understand; the failure he confronted was too great. Coolidge had retreated into his dark moods, and now Hoover retreated into his. He even suggested, improbably, that Americans were profiting by gouging one another, selling apples at high prices: “Many persons,” he would write, “left their jobs for the more profitable one of selling apples.” The attitude came out of his sense of futility, but to citizens it seemed too much. Abroad, all that foreigners knew was that Americans were hungry or worse. That year donors in the Cameroons of Africa shipped over $3.77 to help “the starving.”

One group was meanwhile becoming emblematic of Americans’ wronged virtue: World War I veterans. In the 1920s, Congress had promised them a bonus pension, to be handed out in 1945. The idea was to provide the equivalent of a federal pension. Now, the veterans were losing their houses, their businesses, and their farms. It seemed reasonable therefore to ask Washington for their money—or at least an advance on the bonus. In Congress, representative Wright Patman of Texas was leading a fight for a new bond issue to raise the bonus money for the veterans. Mellon and his undersecretary at the Treasury, Ogden Mills, opposed it in the name of balancing the budget.
It was one of the Hoover administration’s weakest moments: “We loan millions to wealthy shipbuilders at 2 percent but we charge veterans 6 percent,” a congressman pointed out.

There was something amiss with any country that did that. Was it the money, or the leadership? At a conference of disabled veterans in Wilkes-Barre, Pennsylvania, Patman called for the ouster of the man who was becoming the symbol of all that was wrong: Mellon.

But what might fix it? Mellon still believed that, however hard things were now, they could rebound. Like Hoover, or Coolidge, he tended to turn inward in the face of onslaughts like 1931. He reverted to his old business self, which knew what to do in a time of downturn: buy. As treasury secretary, he was constrained when it came to investing in companies or bonds for his own profit—indeed, Patman was after him for holding stock in a shipping company. But he could, he believed, buy art for himself. The best moment to buy art, of course, as he had learned at the bitter dissolution of Frick’s estate, was in a distress sale.

And as it happened the greatest distress sale in the art world was on: the Soviet Union was selling. Stalin needed hard currency badly. He was therefore offering a transaction obvious to both him and Mellon: Mellon would purchase some of the art from the Hermitage. The buying had already begun. Mellon did not talk about it, but in September 1930, the
New York Times
carried reports that a Mellon representative—Knoedler—was in Paris arranging the purchase of Jan van Eyck’s
Annunciation
from a Bolshevik regime broker, A. V. Lunacharsky, the former Soviet commissioner of art. The price was rumored to have been $800,000. Both Mellon and the Soviets promptly denied the transaction, the Soviets because, as the
Times
put it, such a purchase would be “an admission of moral as well as financial weakness from which the Soviet Union is not now suffering.” But the rumors had not died, and the next month, October, saw reports that Frans Hals’s
Admiral
and Rembrandt’s
Portrait of Sobieski
had exchanged hands, along with the van Eyck. Now, in 1931, Mellon moved again, making a series of purchases that formed the nucleus of a new collection. From “time to time,” David Finley, then Mel
lon’s staffer at Treasury, recalled later, “cables would arrive, saying that Botticelli’s
Adoration of the Magi,
Jan van Eyck’s
Annunciation,
Perugino’s
Crucifixion
…could be bought if Mr. Mellon gave his approval.” Mellon gave his approval. He still saw Russia as a wreck, and himself as retrieving some good from what was otherwise a general disaster.

Now Hoover began to stir. He could see the consequences of the international debt and the tariff, for both the United States and Europe. In June 1931 he announced a plan that would bring relief to Europe: a moratorium of interest payments on the German debt. Mellon negotiated on his behalf. Keynes of course liked the idea but announced his own, more comprehensive five-year plan. The stock market in Berlin exploded in joy, moving so fast that officials could not track and record the price rises; perhaps the shaky Weimar Republic might have a future after all. In Chicago, wheat climbed five and a half cents per bushel. At home, Hoover set to work creating the Reconstruction Finance Corporation, to help banks that sustained the homeowners and create the very sort of network that Eccles had seen as lacking.

On other matters, Hoover stayed firm in his old positions. The dam on the Colorado ought to be hurried along, but only because it was constitutional. Not however the government operation of Muscle Shoals, the vast power and nitrate plant built on the Tennessee River at the end of World War I. Washington’s operation of Muscle Shoals was to Hoover’s mind still wrong; government in the power business was still wrong, at least in peacetime. A few months earlier, even as he was mulling over legislation put forward by Senator Robert Wagner to create employment agencies across the states, Hoover spent a day reviewing Muscle Shoals legislation sent to him by Congress. Senator Norris—the Muscle Shoals champion and a fellow Republican—sent emissaries to the White House to try to talk Hoover into going along even as he publicly mocked Hoover as “the great engineer.” But Hoover vetoed the laws on principle, writing that such projects “break down the initiative of the American people.” He summed up: “I am firmly opposed to the Government
entering into any business the major purpose of which is competition with our citizens. There are national emergencies which require that the Government should temporarily enter the field of business, but they must be emergency actions and in matters where the cost of the project is secondary to much higher considerations.” Government shouldn’t get into the power business, or any business—“that is not liberalism, it is degeneration.” Traditional federalists marked it as his finest hour.

Even as Hoover made his point, however, broad interest in the concept of government control was expanding among Americans. American magazines had carried 112 articles on economic planning in 1928. By 1930, that figure had been 210, and as economic trouble deepened, it would reach 365 in 1931. Cole Porter had not yet written the song with the line “You’re the top, you’re Mussolini.” Mrs. Hearst had not launched the sort of barrage of publicity that the Soviet junketeers had. But attention to Mussolini’s model was indeed also intensifying. The U.S. press reported Mussolini’s every action, including the fact that the premier had now reached a trade agreement with Germany’s chancellor, Heinrich Bruening, and would sell the Germans surplus Italian oranges and lemons.

The Soviet model was also under a spotlight. Suddenly, at least in the intellectual world, it looked as if Mellon’s contempt was the minority view and frank interest in the Soviet effort was mainstream. It was an exhilarating turn: the intellectuals were hot after all. Between 1920 and 1931, some eighty books by American authors on the new Soviet experiment had been published in the United States. Lately the pace had accelerated—Tugwell, Chase, Douglas, all were now publishing books or articles. (Chase also had another non-Russian book out, about Mexico, illustrated by a new artist named Diego Rivera.) Russian authors were being translated and published as well. In one week in July 1931, around the time Eccles was worrying about his banks, the papers reported news of the publication of all the following new books:
The Success of the Five Year Plan
, by V. M. Molotov;
Red Villages,
by Y. A. Yakovlev;
The Volga Falls to the Caspian Sea,
by Boris Pilnyak. As for George Counts, he had himself a national best seller in
a Russian children’s book that he had translated and edited. And this book, unlike some of the earlier ones by the junketeers, was published by a mainstream press: Houghton Mifflin. The book, Mikhail Ilin’s
New Russia’s Primer: The Story of the Five Year Plan
, offered lessons from Russia, right down to the construction of hen coops. It suggested that each peasant in Russia could be sure of owning “two good laying hens,” both a doubling and a mockery of the offer Hoover had made in his campaign just three years before.

Many Americans wanted to see Stalin’s experiment for themselves. Some 2,500 had visited the Soviet Union in 1929. The next year that figure doubled, and it more than doubled the year after that. In 1931 Amtorg announced that it had 6,000 skilled jobs to fill, with 100,000 applications flowing into the office. Sometime at the end of September or in early October 1931, the editors at
Business Week
sorted through a morning’s sample of 280 applications and found that there were two barbers, one funeral director, two plumbers, five painters, fifty-eight engineers, and a dentist among the group. Two of the top three reasons the applicants cited for their interest in the move were unemployment and “disgust with conditions here,” the magazine reported. The third was “interest in the Soviet experiment.” Immigrants were especially disillusioned with the United States; nearly all stated that they planned to stay once they got to the Soviet Union.

The next month—November 1931—the left-leaning
Nation
inaugurated an ebullient series titled “If I Were Dictator.” The author of the first article in the series was the prolific Stuart Chase. Chase seized the opportunity to present an agenda that was simultaneously modest and far-reaching. It included abolition of the protective tariff, except for new industries, and an end to war debts. Wine and beer were to be made legal. He also wanted to recognize Russia “at once” and then sell her a billion dollars in American goods. He wanted federal relief for the unemployed, as well as a “complete system of old age pensions.” He advocated spending freely to promote growth, notwithstanding what that did to deficits—“the effects on the federal budget will not disturb me in the least.” More important,
however, Chase wanted to set up a “long swing program” to plan the U.S. economy, dividing industry into state trusts, regardless of what old antitrust law might say about that (“the Sherman anti-trust law is of course declared a piece of antiquated lumber”).

To run his fantasy economy, Chase appointed a fantasy board of planners: Robert Lynd, the author of
Middletown
; Walter Lippmann, the journalist; Bernard Baruch, who had run the War Industries Board in World War I; John Dewey, the philosopher and educator; and two friends from the Russia trip, Paul Douglas and Rex Tugwell. The article made the cover of the issue of November 18, 1931; underneath ran the headline for another story: “Mr. Hoover Gets Notice to Quit.”

There were a number of others who thought that now was the moment for revolution, or at the very least communism. The author John Dos Passos wrote that given such conditions, “becoming a socialist would have just the same effect on anybody as drinking a bottle of near beer.” Many of the progressives, likewise, continued to believe that to pin all hopes on Norman Thomas, James Maurer, and their Socialist Party would be to fail. The country had not changed that much. So they began to hunt for political leaders within the big parties: Newton Baker, a New York lawyer who had served as mayor of Cleveland before World War I, attracted a number of them, including Adolf Berle and Wendell Willkie. Baker, too, thought a lot about Russia. In the
New York Times
of the following year, Baker would outline what seemed now a permanent problem: child homelessness. Thinking of the children on the streets in revolutionary Russia, Baker would write: “America’s vagabonds, however, share this quality in common with Russia’s wild children; having tasted the poison of a wandering life they find it difficult to give up.”