On paper, at least, the solution was already at hand. The Shipping Act of 1916—passed with one eye on the bloody war in Europe—had created a five-member United States Shipping Board charged with fostering a strong U.S. shipping industry, both for transoceanic and coastal trade. The Board was authorized both to build and to operate a government fleet under the auspices of a subsidiary called the Emergency Fleet Corporation (EFC). To placate the operators of private shipping lines, Congress stipulated that the government fleet had to be disposed of within five years of the end of the European war.7
President Wilson didn’t appoint the Shipping Board’s members until March 1917. But the United States’ entry into World War I the following month—combined with a congressional appropriation in June of $750 million to buy or build merchant ships—pushed the Board into a higher gear. (The appropriation was quickly increased to $2.9 billion: more than the value of the entire international shipping fleet in 1914.8) For the duration of the war, the EFC not only operated existing merchant ships, leased from private operators by the government, but also orchestrated a massive shipbuilding program, whereby private companies built merchant vessels and delivered them to the government.
It was a classic bureaucratic mess, exacerbated by the uncertainties of war. The EFC ordered some 18 million tons of shipping, of which only about 3 million tons were delivered before the Armistice. Another 4.5 million tons were canceled, but the remaining tonnage was delivered to the EFC between November 1919 and May 1922. All told, the EFC received 2,311 ships, the vast majority of which never saw service in World War I, and most of which had been built with taxpayer dollars on a rush basis at staggering expense.9 Ships that would have cost $75 per ton to build in the United Kingdom cost upward of $145 per ton to build in the United States. As President Wilson’s Treasury Secretary, William G. McAdoo, observed: “Appalling prices were paid for everything that had to do with a ship. Engines and other equipment were purchased at such a staggering cost that I fancied more than once that the machinery we were buying must be made of silver instead of iron and steel.”10
From the outset, the Board was inclined to sell its ships rather than operate them, because it was painfully clear that the government couldn’t run ships efficiently. But most of the ships were slow, coal-burning vessels, and a quarter of them were wooden-hulled; few operators wanted to buy ships that were already obsolete.
As the Republicans set out to make good on their campaign promises to cut government waste, the Shipping Board and its nearly useless fleet—then operating at a deficit of $15 million per month—seemed an obvious target. But for a president who wanted the United States to be the “most eminent of the maritime nations,” the evisceration of the merchant fleet and the destruction of the domestic shipbuilding industry were appalling prospects.
Sometime in the spring of 1921, Will Hays met with Albert Lasker to talk ships and shipping.11 Hays told his former subordinate about the sorry state of the Shipping Board and explained that President Harding felt compelled to appoint the Board’s seven members as soon as possible.12 The president planned to make these appointments on a geographic basis, and Harding wanted Lasker to serve as the representative from the Midwest. Lasker, still smarting at being snubbed for Secretary of Commerce, took offense: “I can remember, although I don’t think Mr. Hays knows to this day, the hurt I felt at being tendered what I felt to be a very minor position. Shipping was a subject that I wasn’t interested in, and which I had never thought about . . . I told Mr. Hays please not to pursue the matter with me.”13
In fact, Lasker had thought a good deal about shipping. Several months earlier, his friend John Callan O’Laughlin had guessed that Lasker would be offered either a seat on the Shipping Board or its chairmanship. At that time, O’Laughlin had advised Lasker not to accept a seat on the Board, but to accept the chairmanship if it was offered. It would be a “wonderful business problem,” O’Laughlin noted, and would position Lasker well when the inevitable cabinet reshuffles began.14
So Lasker turned Hays down. But toward the end of May 1921, President Harding invited Lasker to Washington.15 At a White House meeting on a Friday morning, Harding explained the difficult predicament in which he found himself. By law, he had to appoint a new Shipping Board. Rumors of corruption and cronyism at the Board abounded—rumors that Harding had helped fuel during the presidential campaign. Now, the president’s advisers were warning him to clean up the Board quickly, before it came to be seen as his mess. And to Harding, it went well beyond defensive measures: “It just so happens,” he told Lasker, “that the thing that interests me most in being president is the merchant marine.”16
The immediate problem, Harding continued, was that he couldn’t find anyone to run the Shipping Board. He had first offered the job to James A. Farrell, president of U.S. Steel, which then operated the largest fleet of tankers in the world. Farrell turned him down.17 Harding then approached Philip A. S. Franklin. Franklin was the president of International Mercantile Marine—the British-flagged but American-owned shipping combine controlled by J. P. Morgan—and Senate Republicans told Harding that because of the British flagging, Franklin couldn’t be confirmed. Harding next tried to recruit William C. Teagle, the president of Standard Oil Company of New Jersey, which owned one of the largest tanker fleets in the world. Teagle also turned the job down, explaining that his Rockefeller connections would make him too controversial.
And so, Harding said to Lasker, that brings me to my fourth choice: you.
Lasker immediately declined, citing his complete lack of knowledge of the world of shipping. But he made a creative counterproposal: he would serve as Teagle’s assistant on the Shipping Board, and he would work to make the public “enthusiastic about [Teagle’s] appointment.” Once Teagle was in place and accepted—a selling job that Lasker estimated would take no more than sixty days—Lasker would give up his assistant’s post and head back to Chicago.
Harding agreed. Teagle couldn’t return to Washington until Sunday night, so the president asked Lasker to stay in town. He could attend a White House garden reception on Saturday, Harding said, and go to church with him and “the Duchess” on Sunday. Lasker consented, although neither activity held much appeal for him. After the church service, the president teased Lasker about putting a five-dollar bill in the collection plate. “Albert,” he joked, “you’re setting a pretty steep pace.”
“I was so glad not to hear that the Jews killed Christ,” Lasker later joked, “I wanted to give the minister a reward.”18
That night, Teagle arrived from New York, and—under heavy pressure from a president and one of the world’s great salesmen—he agreed to take the job, on condition that the chairman of his board, Alfred C. Bedford, give his consent. Teagle left on the midnight train for New York, intending to seek an early meeting with Bedford. Lasker boarded the “midnight” to Chicago, delighted with his coup: he would only have to be in Washington for a few months, and then he would be free of the Shipping Board.19
But again, things took an unexpected turn: “I didn’t get to my home outside Chicago until late the following evening, and when I got there, my wife handed me a telegram from the president. He recounted that he had just talked to Teagle on the telephone, that Teagle had talked it over with Mr. Bedford, and that Mr. Bedford had assented. [But] while Mr. Teagle had the phone call in, Mr. Bedford had a heart attack.”20
Harding released Teagle from his obligation, and once more needed a chairman, and quickly. He sent a telegram to Lasker, insisting that he rescue him from the difficult situation in which he now found himself. “I have every confidence that you can make it go,” Harding concluded. “At any rate I know of no one else to whom I may turn with a greater degree of confidence.”21
At this point, Lasker recalled, Flora had already made up her mind: “My wife handed me the telegram and said, ‘I couldn’t live happily with a man who would say no to an appeal like that last paragraph.’ That’s how I came to be chairman of the Sh
ipping Board.”
There was more to the story. Flora had been disappointed to learn that Albert had turned the job down in the first place; she thought that a stay in Washington would be a mark of distinction for her husband—perhaps positioning him for future forays into politics—and might also be a good experience for their three children, Mary (then seventeen), Edward (nine), and Francie (five). Now the opportunity had arisen again “You have got to take it,” Flora told her husband.22 He capitulated.
In White House huddles with Harding on June 7 and 8, Lasker put a number of conditions on his service.23 He would get the job done, he told the president, but he would serve no more than two years. No other department could interfere in his work. If the president didn’t like the way Lasker was running the Board, he could fire him. Meanwhile, Harding would support Lasker by paying high salaries to qualified shipping executives, which—Lasker emphasized—was the only way he could lure management talent into short-term government service.
Harding readily agreed to these terms. On June 9, 1921, Lasker and the six other proposed Board members were confirmed by the Senate.24 Lasker’s confirmation represented a quiet milestone: after Louis Brandeis’s nomination to the Supreme Court in 1916 and Bernard Baruch’s appointment as head of the War Industries Board during World War I, Lasker became only the third Jew ever appointed to a high post in the federal government.
But Harding’s congratulatory telegram to Lasker was notable for its bleak overtones. “To be honest about it,” Harding wrote, “I have doubts about whether anybody who gets on the Shipping Board is entitled to congratulations, because you have now got tangled up with the ‘damnedest’ job in the world.”
Lasker told a reporter from Printer’s Ink that he would cut his ties to Lord & Thomas, turning over day-to-day management of the agency to Herbert Cohn, his long-time general manager in Chicago.
Lasker also talked to a New York Times reporter the day after his confirmation, and the story landed on page 1.25 “It will be the purpose of the new Shipping Board to get the Government out of the shipping business as rapidly as possible,” the Times reported, in a voice that sounded very much like Lasker’s. “There must be nothing that smacks of permanent Government ownership or operation.”26
From his first day on the job, Lasker found himself taking on water. “I got in Monday morning,” he wrote to a friend, “and inherited a great and bitter strike which is pressing for settlement, and is taking all my time.”27 Lasker helped resolve the strike (by the Marine Engineers Beneficial Association) within a few days.28
Things would not again be so easy. The Shipping Board was the “most colossal commercial wreck the world ever knew,” Lasker told a reporter.29 It was also a complex wreck. On the day Lasker took office, the Shipping Board (through its Emergency Fleet Corporation) owned 1,522 steel ships and 454 wooden-hulled vessels—and that was only the visible tip of the iceberg.30 The Board also had substantial investments in 200 shipbuilding and industrial plants, 19 drydocks, and 12 marine railways. It had spent $70 million on worker housing during the war; as a result, it had at least a partial stake in 5,555 houses; 72 apartment buildings; 62 dormitories; 20 combined apartment/retail complexes; 11 stores; and hotels, boarding houses, and cafeterias (4 each). In addition, it owned “vast quantities of steel, lumber, engines, boilers, winches, pumps, locomotive cranes, air compressors, and miscellaneous materials.”31
President Harding assembled the Shipping Board at the White House on June 17 to demonstrate his commitment to a strong merchant marine. In informal remarks to the press after the meeting, Harding praised his relatively youthful chairman. Lasker was not there because he was a shipping expert, Harding said; he was there because he was a “live wire” who would bring energy and ability to the job. In fact, Harding joked, Lasker was the “livest wire” he knew.32
In addition to Harding’s strong endorsement, Lasker started the job with two other reliable allies. The first was the peripatetic John Callan O’Laughlin, who by 1921 was wearing multiple hats: filing reports as the Chicago Herald’s Washington correspondent and also working as the Washington lobbyist for a New York export company.33 Lasker knew that he had to figure out Washington in a hurry and that he needed a skilled writer to help get his messages across to a skeptical Congress and public. O’Laughlin agreed to take a brief leave of absence from his several jobs to serve as Lasker’s personal assistant until the post could be filled permanently. Lasker later recalled the deal that they struck (and which he soon reneged on):
O’Laughlin was tied up with other things, but as a man imbued with a desire for public service, he said, “I’ll come with you and give you time to look around and get someone.” Which he did. Well, I let one week run into another, and about four weeks had passed, and O’Laughlin said to me, “Where is your other man? I want to get out. I have my work to attend to. I only did this as a favor to you.”
[But] he was invaluable. I was really double-crossing him and giving him the runaround. I didn’t want anybody else . . . So I just did nothing . . . O’Laughlin got on to that. At the end of six weeks he said, “Well, I have my successor, and I’m quitting.”34
The successor O’Laughlin had come up with was Ralph Sollitt, by this point a vice president in a Washington bank. Lasker was astonished that someone of Sollitt’s caliber could be persuaded to join him at the Shipping Board as his personal assistant. In Washington, as Lasker later observed, a personal assistant to the chairman is the person “on whom they inflict all the humiliations that they would like to put on the board and daren’t.” So O’Laughlin had pulled off a small miracle.
The second key ally Lasker brought along was his lawyer, Elmer Schlesinger, who was appointed the Board’s general counsel. Schlesinger, too, faced daunting tasks. Supervising the Board’s seven hundred in-house lawyers—and also bringing in outside help from law firms in New York, Philadelphia, and Boston—he had to start working off an enormous backlog of claims against the Board: some seventeen hundred admiralty cases involving a total of something like $100 million.35
Schlesinger also initiated a review of all the contracts that the Board had signed with private companies to operate government ships. Prepped by Schlesinger, Lasker publicly denounced the worst of the existing contracts as “the most shameful piece of chicane, inefficiency, and of looting of the Public Treasury that the human mind can devise.”36 He had the offending contracts voided, and the Shipping Board took over direct operation of the vessels.
On June 24, Lasker called together the heads of the major shipping companies in New York and asked them each to turn over one of their best managers to Lasker’s enterprise. None of these three individuals, once identified, wanted to take the job; it required arm-twisting by President Harding to get them to agree. Lasker made sure that this recruitment process—intended both to infuse the Board with unprecedented talent and inoculate it against his own lack of shipping experience—got plenty of publicity.
During his visit to New York and on many subsequent occasions, Lasker made a point of cultivating the press. He spoke colorfully and with calculated candor, thereby earning friendly treatment even in papers (such as the New York Times) that were inclined to be suspicious of a Republican businessman-turned-bureaucrat: “The Chairman spoke of his regret that Mr. Teagle did not take the job, and remarked that the board had been changing chairmen faster than they change pitchers in a losing ball game, said he was going to do his best and if he did not succeed he would just go home very quietly and promise to pose for lots of pictures if, and after, he had made good.”37
Two months later, when Lasker lost a battle in the House of Representatives and took some personal hits from his congressional adversaries, the Times editorialized sympathetically:
It is no reflection upon Mr. Lasker to say that the Shipping Board has never had such an original character at the head of it. He speaks out in a way that bewilders Congress . . .
Chairman Lasker has a marvelous fluency, and his eyes gleam and
sparkle as he talks. ‘I have taken a man-killing job, but we will stick until our health breaks,’ this human dynamo of a Chairman told the committee. Congress may not believe Lasker, but he believes in himself.38
Also in this start-up phase, the “human dynamo” persuaded Robert H. Montgomery—a partner in a large accounting firm—to come to Washington for four months to straighten out the Shipping Board’s books. This, too, was a staggering proposition. The Board employed some three thousand accountants when Lasker arrived in Washington, but it had no books. “There was no inventory,” he recalled. “There was no balance sheet. There was no operations statement. There was just in and out cash.”39
In some cases, getting a handle on the Board’s affairs only made things look worse. “When we finally took an inventory of the ships we owned,” Lasker told Columbia’s oral historians, “we were one ship short! We couldn’t find a ship! Losing a ship is like losing a skyscraper.”40
Montgomery discovered twenty-eight men who had been put on the Shipping Board payroll on the day before the Armistice—in November 1918, two and a half years earlier—and who had never done anything except collect their salaries. After two weeks on the job, Montgomery came to Lasker with a radical proposal: Start at the northeast corner of the accounting room, fire every third person, and see if anything bad happens.
Lasker fumed publicly about the state of the Board’s record keeping: “Had the books been kept with a view to cheating and deceiving Congress and the country, they could not have been kept in much different shape than they have been, and I measure the words I am using. It has almost worn me out physically and mentally to get anything from the books that could be considered complete.”41
The Man Who Sold America: The Amazing (but True!) Story of Albert D. Lasker and the Creation of the Advertising Century Page 26
