Shortfall

by Alice Echols

  33. In 1921, Congress repealed the wartime excess profits tax, eliminated many luxury taxes, lowered corporate taxes, and slashed the maximum personal income tax from 65 percent to 32 percent. Mellon successfully advocated further reductions which created “windfalls for the wealthy.” See Tygiel, Great Los Angeles Swindle, 10.

  34. Mayo quoted in Christopher Hawthorne, “Reading L.A.: Louis Adamic and Morrow Mayo” Culture Monster blog, LAT, January 31, 2011, http://latimesblogs.latimes.com/culturemonster/2011/01/reading-la-louis-adamic-and-morrow-mayo-1.html.

  35. Associated Cultural Resource Experts, Highway to the Sky: A Context and History of Colorado’s Highway System (Denver: Colorado Department of Transportation, 2002), ch. 5, “The Automobile Age Begins,” https://www.codot.gov/programs/environmental/archaeology-and-history/highways-to-the-sky/ch5.pdf.

  36. Much of what I know about Sims is gathered from newspaper articles about him that appeared in the local press and from Wilbur Fiske Stone, ed., History of Colorado (Chicago: S.J. Clarke, 1918), 2: 676–78.

  37. My discussion of credit rating agencies draws on Scott A. Sandage’s Born Losers: A History of Failure in America (Cambridge, MA: Harvard University Press, 2005), 148, and more generally chs. 5 and 6.

  38. Yarrow, Thrift, 43. See David Kennedy, Over Here: The First World War and American Society (New York: Oxford University Press, 2004) 105.

  39. Typical of the men involved with Assurance was Edgar Ensign, who was president of the association and Colorado’s first commissioner of forestry. It was likely his death that precipitated the firm’s sale to Sims.

  40. “Springs Building Records Go Up by Leaps and Bounds,” CSG, March 27, 1922.

  41. “Lennon Park Name of New Townsite,” CSG, April 15, 1921, 2. The Gazette published real estate advertisements for Lennon Park in April and May 1921. Adams Crossing is roughly at the intersection of Columbia Road and West Colorado Avenue, the main road that runs between Manitou Springs and Colorado Springs. It was named after the Civil War general Charles Adams, who came to Colorado after being wounded in the war to work as an agent for the White River Ute tribe in northwestern Colorado. Some believe that Adams’s two-story Victorian was located right by the crossing and inside the current boundary of the RV campground. The crossing is roughly where Fountain Creek crosses West Colorado Avenue.

  42. Often embezzlers are lower-level employees, although that description does not describe those who embezzled in the B&L scandal or in the S&L crisis fifty years later. See Kitty Calavita, Henry N. Pontell, and Robert H. Tillman, Big Money Crime: Fraud and Politics in the Savings and Loan Crisis (Berkeley: University of California Press, 1997), 63. For a useful treatment of today’s most notorious embezzler, Bernard Madoff, see Diana B. Henriques, The Wizard of Lies: Bernie Madoff and the Death of Trust (New York: St. Martin’s Griffin, 2012), 93.

  43. Bentall differed from your average KKKer in that he belonged to downtown’s First Baptist Church and not to the Pikes Peak Baptist Church in west Colorado Springs, whose membership was heavily Klan. Bentall was a deacon at the First Baptist and may have played a role in the sudden departure of its anti-Klan minister, Reverend Fulton, who resigned, without public explanation, in 1927. Years later, one resident recalled that the local KKK included no one “with any promise.” There was at least one exception to that rule, however: lawyer and judge John E. Little. Goldberg, Hooded Empire, 55.

  44. Less than four months after his association opened, Bentall arranged through the Home to loan $700 to a local laborer, Mike Daniels. As was customary, Daniels’s loan was secured with a trust deed, in his case on a west-side property. Six weeks later, Daniels showed up at the Home’s office and paid $20 on the loan. Three weeks later he appeared at the association, this time with a check to pay off his loan in its entirety. People didn’t usually pay off such a substantial loan that quickly. Most peculiar of all, Daniels paid it off with a check in the amount of $1,350. The check was from his friend Elmer Gunckle, a railroad repairman. Daniels directed whoever was working that day to have the association take the $680 (plus interest) that he still owed on the $700 loan and return the rest to him. Instead, the association cashed the check, released the trust deed on Daniels’s property, and kept the remaining $670. Daniels was an immigrant who had come to the United States in 1907. He had few skills or resources, as evidenced by the fact that he was still working as an unskilled laborer—a ditchdigger—in 1930. See Mike Daniel vs. The Home Savings, case no. 16449, Box 37618, CSA. For the state of Bentall’s bookkeeping, see “$100,000 Shortage Denied by Bentall,” CSG, July 8, 1932.

  45. This is what happened to them in Sheridan, Wyoming, where they ended up selling many acres of rich land to their better-capitalized sometime partners Oliver Shoup and Verner Reed. Reed and Shoup paid them a half million dollars, so McKinnie and Davie made some money on the venture.

  46. The newspaper article emphasized that in their Arizona ventures the two men relied upon the purchase of “script” rather than their own money. “Cropping of Desert Acres,” Arizona Republican, May 27, 1912.

  47. He was the president of the Manitou Mineral Water Company until sometime in 1920 or 1921, when the governor’s son, Oliver Shoup Jr., assumed that position. Spencer Penrose, who was famously “wet,” purchased the company from Shoup after the enactment of Prohibition, some say as a front to import alcohol; the company closed down after Prohibition was repealed. Dave Philipps, “Changing Hands Left Springs in the Shadows,” CSG, July 17, 2011.

  48. “Auditor, Former Employees Tell About E.C. Sharer’s Acts When Dollar Co. Audit Was Demanded,” CSG, September 28, 1932.

  49. “Report Governor’s Special Committee.”

  50. Kathleen Day, S&L Hell: The People and the Politics Behind the $1 Trillion Savings and Loan Scandal (New York: Norton, 1993), 191.

  51. This is Louis Hyman’s characterization. See Borrow, 74.

  52. Roth, The Great Depression, 26; Galbraith, The Great Crash, 152–55.

  53. For example, building and loans, which were by law made to keep their deposits in banks, sometimes were forced to close when the banks holding their money failed.

  54. Sandage, Born Losers, 254–55.

  55. Having brokered the legislation for the Moffat Tunnel in 1922, Roy was a rising star in Republican politics in Colorado.

  56. Julie Berebitsky, Sex and the Office: A History of Gender, Power, and Desire (New Haven, CT: Yale University Press, 2012), 61.

  57. In piecing together her past I have relied upon census records and city directories.

  58. It was the brother of C.C. Hamlin, the Gazette’s publisher and a leading member of the Mine Owners’ Association, who brought Luke Terry’s body back to the Springs for burial. News accounts claimed that he was a student at Colorado College, but he is not listed in the records, and in one account of Ludlow he is identified as a mine guard. See Martelle, Blood Passion, 131. Martelle puts the number of dead during the fifteen-month strike at more than seventy-five. Historian Thomas Andrews, whose book Killing for Coal is beautifully written and extremely useful, cautions against what he calls “the perpetuation of the Ludlow-as-massacre story” on the grounds that it distorts our understanding of the relationships between the workers, the owners, and the state. I understand the desire to avoid the trope of victimization—after all, the striking workers were violent—but, as with the 1903–4 smelters strike discussed earlier, there is no getting around the imbalance of power between the strike owners and the striking workers. See Green, “Re-interpreting Ludlow.”

  59. By the 1920s courts were actually granting alimony more frequently, but the percentage of divorced women awarded alimony stood at only about 15 percent, according to U.S. Census Bureau statistics. See Amanda Barusch, Brooks/Cole Empowerment Series: Foundations of Social Policy (Belmont, CA: Centage, 2014), 384.

  60. This was reported in Walter’s FBI file.

  61. For example, even the sons of Governor Oliver Shoup faced unwanted publicity when their marriages “we
nt on the reef.” In 1932, the Rocky Mountain News gloated, “Surprise piled upon surprise in the matrimonial affairs” of Oliver Shoup Jr. when his wife, claiming mental cruelty, filed for divorce, and his own dalliance with a divorcée became known. “Mrs. Oliver Shoup Jr. Files Suit for Divorce,” RMN, April 28, 1932, 1. Three years into their marriage, Merrill Shoup’s first wife sued for divorce because, she claimed, he had treated her cruelly and had refused to support her. See “Merrill Shoup Is Sued for Divorce,” CSG, July 8, 1925, 10.

  62. Lula shared with her daughter updates about Walter and Eva. Dorothy noted in her diary during the summer of 1927: “Mother saw E driving up and down Cascade to pick him up after he telephoned from drugstore—didn’t tell him.”

  63. Knox was not cheap. Tuition and board came to nearly $1,000 a semester—a sum that did not include the many extra charges that the school levied. For my mother a typical semester’s costs included $75 for horseback riding, $100 for piano lessons, $50 for lectures and athletics, a $50 registration fee, $19.25 for weekly hot oil shampoos and manicures, $7 for excess laundry charges, $2.70 for ladies’ maid service, and $2.50 for her (required) seat in the church. Students were charged for uniforms, note pads, textbooks, and even cocoa. All in all, Knox would have cost Walter about $2,700 a year, which, when converted to 2016 dollars, is roughly equivalent to what a tony private boarding school costs parents today.

  64. “Noted Author Has Article on Cheyenne Mountain Country Club in Country Life,” CSG, August 20, 1920, 6.

  65. David Shumway, “Fetishizing Fetishism: Commodities, Goods, and the Meaning of Consumer Culture,” Rethinking Marxism 12, no. 1 (Spring 2000): 11; Lewis, Babbitt, 62.

  66. In fact, the very same month that Walter declared his readiness to “go through with it,” a Denver oilman and millionaire had settled out of court with a showgirl whom he had promised to marry. She collected $45,000. Undated news clipping about Denver oilman Frank Kistler, May 1929, Davis Family Archive.

  67. Much of Colorado had limped along in the aftermath of World War I. However, the state’s fortunes began to revive by decade’s end. Pueblo’s Colorado Fuel and Iron Company, the biggest steel plant west of the Mississippi, enjoyed such a profitable year in 1929 that the firm budgeted for $1 million of additional coke ovens. This account of the frenzy in the Springs appeared in the Rocky Mountain News and is cited in Leonard, Trials and Triumphs, 13. For pre-crash conditions in Colorado, see Leonard as well.

  68. Parts of southeastern Colorado were part of the Dust Bowl. For the slump preceding the Great Depression in the Dust Bowl states of North and South Dakota, see Catherine McNicol Stock, Main Street in Crisis: The Great Depression and the Old Middle Class on the Northern Plains (Chapel Hill: University of North Carolina Press, 1992), 18. On stock exchanges after the crash, see Roth, The Great Depression, 7. On conditions in the fall of 1929 in Colorado Springs, see “Stock Market Crash Now Latest Alibi of Debtors,” CSG, November 3, 1929; “Will Transfer Movie Studio to Springs,” CSG, November 10, 1929, 1.

  69. The number of his depositors varied according to newspaper and publication date. I have chosen to go with the number of 3,609 that the receiver and his lawyer supplied to the press. “Second Dividend on City Savings,” CSG, October 18, 1936, 1.

  4: Slipping Through Your Fingers

  1. Much of this account is drawn from William E. Leuchtenburg, Herbert Hoover (New York: Times Books, 2009), 129–34.

  2. This happened in Youngstown, Ohio, in the spring of 1932. See Roth, The Great Depression, xiii, 54.

  3. “Fewer Desirable Rentals than a Year Ago,” April 26, 1932, CSET, 14.

  4. “Unemployment is Growing In City, Says Secretary,” CSG, January 18, 1931.

  5. McNicol Stock, Main Street in Crisis, 18; Leonard, Trials and Triumphs, 25–26.

  6. “A.E. Carlton Estate Value Is $991,069,” CSET, December 25, 1931, 16.

  7. “Heywood Broun Interviews Manufacturer Who Calls Himself a ‘Golf Bag Socialist,’” RMN, 6.

  8. John F. Kasson, The Little Girl Who Fought the Great Depression: Shirley Temple and 1930s America (New York: W.W. Norton, 2014), 19.

  9. See Cohen, Making a New Deal, 267.

  10. Roth, The Great Depression, 26; Galbraith, The Great Crash, 154; “A Bank Swindle Linked with the Market Break,” NYT, February 2, 1930. Nearly a year after their sentencing, only nine of these men were still in prison. See “Acquits Flint Banker in $3,500,000 Shortage,” NYT, December 21, 1930.

  11. “Californian Admits Theft of $7,500,000,” NYT, December 13, 1930; “$8,000,000 Embezzler Heavy Loser in Stocks,” NYT, December 19, 1930. Beesemyer pleaded guilty and was sentenced to forty years in prison. He served nine years in San Quentin, from which he was released in January 1940. The Los Angeles Times was tight-lipped when it came to the area’s B&L failures. The paper noted that two years after the state seized control of his B&L, it had assets (almost entirely in real estate) of over $5 million. However, it would take years before the depositors would see any money. See “Guaranty Loan Set-Up Shifted,” LAT, October 5, 1932. In 1936, almost six years after its crash, the receiver paid out its first dividend—at 10 percent. See “Guaranty Dividends Expected,” LAT, April 7, 1936. It took seven years from the time of its reorganization for the liquidating corporation to operate at a profit. “Guaranty Profits of $44,152 Announced,” LAT, May 18, 1937.

  12. “Whitmore in Danger,” LAT, December 17, 1930.

  13. “Building Loan Offices Moved,” LAT, August 3, 1933.

  14. “Loan Official Gets Long Prison Term,” Pittsburgh Press, June 24, 1932; “Accuse 40 Philadelphians,” NYT, July 28, 1932; “Escaping Gas Kills Editor,” NYT, November 9, 1929. The Newark B&Ler was also an editor of a Hungarian newspaper, and his troubles were exacerbated by a libel suit brought against him by another newspaper editor.

  15. See article on John F. Vivian on page one of the December 10, 1931 edition of the Gazette. His own political career was ruined, but his son was elected governor of Colorado thirteen years later, in 1944.

  16. Galbraith, The Great Crash, 150–51.

  17. In a speech given for the Colorado State League of Building and Loan Associations, probably in 1928, Sims declared that a properly run association could not fail because it was backed by the best possible security, first mortgages on real estate. “Willis Sims Says a B&L Properly Managed Cannot Fail,” CSG, January 19, 1928.

  18. “Home Paper Predicts Early Reorganization of Nevada B.&L. Assn.,” Sikeston Standard, June 10, 1932, 1.

  19. “Loan Association Inquiry Finished,” CSG, January 5, 1932, 10.

  20. “Extension Is Granted for Assurance,” CSG, February 6, 1932, 1.

  21. “Assets of Closed Loan Firms Gain,” CSG, September 22, 1936, 1.

  22. Assurance Liquidation Corporation vs. Buffalo Lodge, Etc., case no. 19082; Grant McFerson, as State Bank Commissioner vs. Fidelity and Deposit Company of Maryland, Etc., Statement of Claim, no. 18886; Assurance Liquidation Corporation vs. Grant McFerson, Etc., case no. 18997; Assurance Liquidation Corporation vs. Buffalo Lodge, case no. 19082, Box 46075, CSA.

  23. “Broadmoor Golfers,” CSG, July 13, 1933.

  24. “R.D. Sims Takes Own Life by Gun,” SGT, February 8, 1942, 4.

  25. “Buffalo Lodge Is Sold for $99,000,” CSG, November 27, 1941, 1.

  26. “City Sued for $1,314.80 by Mrs. Edith Foersteman,” CSG, June 8, 1932, 1. See also Esther Foersteman vs. The City Savings Building and Loan Association, case no. 18875, Box 46075, CSA. Esther and Edith appear to be the same woman, a divorced bookkeeper.

  27. It’s worth noting here that the Denver Post’s tell-all coverage of the B&L scandal was driven in large part by politics. The paper opposed Democratic governor Billy Adams and tried to pin it on him. For examples of these upbeat articles, often published as “specials to” the newspaper in question, see “Building and Loan Associations Gain in Assets and Memberships,” Christian Science Monitor, January 2, 1930, 24; “Building and Loan Associations,” W
all Street Journal, October 26, 1931, 6; “Building and Loans Concerns’ Good Position,” Christian Science Monitor, February 11, 1933, 10.

  28. Pratt quoted in C.H. Packard, “Debate on Spiritualism,” CSI, February 13, 1930, 2.

  29. The Pratts were early adopters of the term “racketeer” to describe unionist officials. See, for example, “Rackets Under Guise of Unions Boycott Trade,” CSW, August 12, 1932, 1, and “Labor Racketeers Coerce Candidates at Every Election,” CSW, August 26, 1932, 1. It was right-wing newspaperman Westbrook Pegler, columnist for the conservative newspaper chain Scripps-Howard, who was most responsible for getting the term into circulation, but not until the early 1940s. Pegler and other conservatives framed as “racketeering” legitimate union activities (dues collection, union shop contracts, and secondary boycotts) and in so doing helped to lay the foundation for the Taft-Hartley Act of 1947, which so undermined the labor movement. The term also helped delegitimate the New Deal. For scholarly discussions of the role played by labor racketeering and the discourse around it, see David Witwer, “The Racketeer Menace and Anticommunism in the Mid-Twentieth Century US,” in International Labor and Working Class History 74, no. 1 (Fall 2008); David Witwer, “Labor History Symposium: David Witwer, Shadow of the Racketeer,” and responses by Kim Phillips-Fein, Robert Zieger, Gerald Friedman, and James Jacobs, Labor History 52, no. 2, May 2011.

  30. It is impossible to know when the Pratts began to go after the building and loan industry because the only surviving issues of the newspaper cover nothing more than the period from May 1932 until November 1932. But certainly by April, if not sooner, the renegade paper was publicizing the situation and driving the panic. The Pratts did break with some other tax-slashing activists by supporting old-age pensions, and very briefly even FDR. See “My Stand on Old Age Pension,” CSW, September 13, 1932, 1. For its views of FDR, see “The Farmers Seize the Donkey,” in the September 23, 1932, issue and “Roosevelt Says Nothing” in the September 30, 1932, issue.