While he was recruiting and deploying out-of-town talent, Lasker also had to get to know his fellow commissioners. The only two he had had prior contact with were Frederick I. Thompson, an Alabama newspaper publisher, and Los Angeles political operative Meyer Lissner, who—like Lasker—had been one of California senator Hiram Johnson’s prominent supporters. Admiral William S. Benson, the celebrated Naval officer who had headed the Board during part of the Wilson administration and into Harding’s tenure, agreed to stay on as a member. George E. Chamberlain was the former Oregon senator and chairman of the Military Affairs Committee who had been defeated in his 1920 reelection bid. T. V. O’Connor, president of the International Longshoremen’s Association, had a reputation for being one of the most powerful labor leaders in the country, and had been on Harding’s short list for Secretary of Labor. Edward C. Plummer, closely tied to the Hale political machine in Maine—Senator Frederick Hale was one of Harding’s closest friends in the Senate—served as the Northeast’s representative on the Board.
“I would say, myself included,” Lasker observed, “that only a democracy could spew up a board like that.”42 But in fact, it was an able board—mostly “outstanding men,” as Lasker later admitted.43
What Lasker attempted to do in his first few months in Washington, beyond cleaning house, was to map out a plan that would bring together the federal government and the private shipping companies in an informal partnership. One essential piece of this plan, he decided—with ample input from ship operators—was a direct government subsidy of selected routes. In theory, this would increase the sale price of the government ships and pay for the subsidies.
Meanwhile, the Board would attempt to modernize its massive fleet. It would also undertake to build up trade on key routes, which it would eventually sell to private operators. At the same time, it would adopt policies to help strengthen the shippers, so that they would be in a position to buy ships and routes when the international economy recovered. All of these steps, taken together, would ease the federal government out of the shipping business.
But reality didn’t conform to the plan. In August, for example, the Board announced its intention to sell 205 of the mothballed wooden ships to a New York company for $430,500, or $2,100 apiece. This was far less than the $700,000 it had cost the taxpayers to build a single one of these ships, and a predictable howl went up in the media and among the Democrats in Congress. The sale was voided. “Wooden ships are about as popular with me as yellow fever,” Lasker grumbled to a Congressional committee.44 When New York Yankees owner Jake Ruppert sent the two baseballs autographed by Babe Ruth that Lasker had requested, Lasker ended his thank-you note with a wry offer: “By the way, whenever you want a bunch of wooden ships, be sure to let me know.”45
Meanwhile, there was a highly visible Shipping Board asset that Lasker had to contend with: the S.S. Leviathan, then tied up at Pier 59 in Hoboken, New Jersey.
This fifty-six-thousand-ton passenger liner—one of the largest in the world—had been built in Germany and launched in the spring of 1914 as the Vaterland. She had made only three transatlantic runs before war broke out in Europe in 1914, at which point she was interned in New York. Seized by Customs officials when the United States entered World War I, the Vaterland was rechristened Leviathan, stripped of her palatial interiors, painted gray, and pressed into service as a troop transport.46 Between the spring of 1917 and September 1919, the great ship ferried some 200,000 U.S. troops to and from Europe, along the way acquiring the nicknames “Levi” and “Big Train.”
Her decommissioning as a Naval vessel that September kicked off a two-year soap opera centered on the hulk—immobile, tied to her Hoboken pier, rusting, plundered by thieves, and in constant peril of death by fire. Just keeping her mothballed cost the federal government $45,000 a month.47 In November 1919, the Shipping Board announced that it would sell the Leviathan and two other seized German liners to International Mercantile Marine.
But to be put back into transatlantic service, the Leviathan would need to be completely rehabilitated—which was impossible because nobody in the United States had a set of plans for the ship. (The German yard that had built the seized ship demanded $1 million for a copy of the missing blueprints.) As a result, IMM’s chief designer, William Francis Gibbs, undertook the almost unimaginable task of reverse-engineering the 950-foot liner, drawing up a complete set of plans and bid specifications for rehabbing the ship. It took a hundred draftsmen the better part of a year and a half (and cost approximately $300,000) to produce 1,024 pages of blueprints and specifications.
By October, the Shipping Board was finally in a position to say exactly what it owned: a tally that ran to twenty-five thousand typewritten pages. It could account for assets that had cost just under $308 million to procure. The accountants estimated that these assets were fairly valued at $92.6 million, but that they had a forced-sale value of about $46.6 million.48 Two departments were set up to oversee the sale of assets: one to sell ships and the other to dispose of the Board’s other surplus materials.
In the year before Lasker arrived in Washington, the Board placed approximately $938,000 in advertising, mainly to increase its freight trade, and mostly with little impact. (One problem was that the Board simply paid for ads written, designed, and placed by the ship operators themselves: hardly a Lord & Thomas formula.) This budget stayed fairly constant during Lasker’s tenure, but he redirected it for greater impact: first to sell off housing and other surplus materials, and—starting in December 1921—to help build the passenger trade on the Board’s liners. He also made the Board prepare its own ads, rather than simply pick up the tab.
When it came to advertising, the Shipping Board now lived by Lord & Thomas’s principles. “I do not believe in advertising merely to get general results, just to make your name known, or in advertising that you cannot measure,” Lasker testified before a Senate subcommittee in April 1922. He told of the nearly empty passenger liners that his Board had inherited, including a Pacific liner that carried only thirty-four passengers on its last run: a horrendous showing. His accountants had told him that bringing in an additional fifteen hundred passengers would pay for all the advertising and create much-needed momentum for American-flag liners. Within a few months of initiating the ad campaign, the Board had received twelve thousand requests for information and had lured four thousand visitors to its ticket offices around the country.
In effect, Lasker recast his challenge as a marketing problem. He and his colleagues at the Shipping Board had to create demand for its goods and services. This, of course, was what Lasker excelled at, but he had never had a “client” as amorphous as the Shipping Board’s. (Was he working for the president? For the taxpayer? For the shipping industry? For oceangoing travelers?) Nor had he had ever worked with an inherited staff, or faced hostile legislators, or been so far out from behind his accustomed curtain.
One of the more oppressive realities of life in Washington was the steady onslaught of political favor seekers and patronage hounds. Lasker had extracted a promise from the president that his Board would be spared undue political interference, and Harding mostly kept his pledge—but of course, others weren’t bound by it.49 Throughout Lasker’s two-year term, he and his Shipping Board colleagues fielded an almost constant barrage of requests for favors from influential people in and out of Washington. Although politicians on both sides of the aisle publicly professed to despise the gravy train that the Board represented, privately they made sure to dip in their ladles.
In May 1922, for example, the Board got a request from Vice President Calvin Coolidge’s office to find summer jobs aboard a U.S. vessel for two college boys who were the sons of one of Coolidge’s friends. Lasker reminded the vice president that the Shipping Board didn’t actually employ any mariners; all it could do was veto an inappropriate candidate put forward by the private operators of those ships. Nevertheless, members of the House of Representatives sought shore-side jobs for constituents; senat
ors sought raises for Shipping Board employees from their home states. Lasker had to tread carefully, in all cases; he knew he would need votes when the Merchant Marine bill that was then taking shape finally came before the House and Senate.50
Throughout the fall of 1921, Lasker and his Board refined their long-term plan for the American merchant marine. Several junior members of Lasker’s staff drafted the bill, while Lasker and his fellow commissioners concentrated on building public support for it.
Finally, the plan was ready and the ground prepared. Harding addressed a joint session of Congress on February 28, 1922, and put the proposed “Merchant Marine Bill” on the table.51 He reviewed the history of the Shipping Board, including its recent record of trying to sell its ships while still operating many of the ships under its control. Lasker’s board had cut its losses, but was still running at a huge deficit. The time had come, Harding declared, to unload the government’s ships for whatever they could bring on the open market. After that, the government would subsidize both the construction and operation of private vessels.
In addition, Harding announced, passage of the Merchant Marine Bill would create a merchant marine reserve (of five hundred officers and thirty thousand sailors) for national emergencies, and would favor American-flag shipping in a variety of ways.52
Initial reaction was mixed. The shippers who had played a major role in shaping the bill applauded it. More neutral observers offered qualified support, pointing out that the United States’ main competitors for ocean trade—especially the United Kingdom—heavily subsidized their fleets. Secretary of Commerce Hoover weighed in with his endorsement, as did the Senate’s acknowledged maritime expert, Wesley Jones.
But organized labor quickly voiced objections, viewing the proposed merchant marine reserve as a potential strikebreaking force. Representatives of the interior states expressed suspicions that this was yet another plot on the part of the wealthy coastal states to enrich themselves at the Midwest’s expense. Most ominous was the negative response of the agricultural lobby, which was always wary of government subsidies of industry, and soon the “farm bloc” in the Senate—a group of twenty-seven senators who tended to vote together on key agricultural issues—began voicing its skepticism.
Lasker spent three days in front of a joint Senate/House committee in the first week of April 1922, explaining and defending his bill.53 Lasker stood up under a thorough grilling, occasionally suggesting that skeptical House members save their detailed questions for the Shipping Board experts who would follow him. “I’m not an expert on certain details,” he admitted. At one point, he described the Board’s overall record at operating ships as “rotten”; he later requested that the adjective be stricken from his testimony.54
It was a bravura performance, but it could not overcome the mounting opposition to the plan. By mid-June, Harding and Lasker had to acknowledge that they didn’t have the votes they needed. House leaders pointed out that even if the bill passed in their chamber, it would almost certainly fail in the Senate. Harding reluctantly agreed to put the bill on hold during a six-week congressional recess, which started on June 30, 1922, and Lasker spent the summer of 1922 tracking newspaper editorials across the country. From that survey, he knew that he was losing the Midwest, Mountain States, and South, even as the coastal states rallied in support of the bill.55
When the House reconvened in August, Republican leaders begged the president to put off action on the bill until more favorable political winds were blowing—and specifically, until after the midterm elections in November. Few in Congress wanted to run for reelection with an unpopular merchant-marine vote on their record.
In particular, in these early years of the nation’s uncomfortable embrace of Prohibition, few wanted to be associated with an especially thorny issue: the sale of alcohol aboard Albert Lasker’s ships.
The National Prohibition Act of 1919—popularly known as the Volstead Act—enforced the 18th Amendment to the Constitution, which prohibited the manufacture, transportation, import, export, sale, and possession of alcohol in the United States. Prohibition quickly proved unenforceable; illegal domestic production was complemented by the smuggled beverages that flowed across the borders from Canada and Mexico and washed ashore all along the coasts.
In May 1922, August A. Busch, president of St. Louis-based Anheuser-Busch, sailed from New York to Cherbourg aboard the S.S. George Washington, a Shipping Board liner. Busch’s huge brewery had taken a body blow with the onset of Prohibition; it was forced to diversify into product lines as diverse as truck bodies, ice cream, and baker’s yeast.56 Upon arriving in France, Busch sent a letter to his son Adolphus in St. Louis, complaining that the Shipping Board was violating the Volstead Act by serving liquor aboard its oceangoing vessels. August enclosed a copy of the ship’s wine list.
On June 8, Adolphus forwarded his father’s letter and the offending wine list (“enumerating intoxicating liquors of every character”) to President Harding. He posed an unwelcome question to the president: if American ships were technically American territory no matter where they were in the world, wasn’t the government acting as a bootlegger aboard the Washington and other Shipping Board vessels?57
Someone in St. Louis leaked a copy of the correspondence to a Chicago Tribune reporter, who immediately made it public. Harding, wanting nothing to do with this budding controversy, forwarded Busch’s letter to Lasker. In his response to Busch, Lasker explained that upon taking office, he had asked the Board’s general counsel, Elmer Schlesinger, to determine whether liquor could legally be sold aboard U.S. ships once they were outside U.S. territorial waters. Schlesinger’s opinion was that such sales were indeed legal, and Lasker therefore did not put a stop to liquor sales on the high seas.
Lasker then made his first mistake. Rather than simply responding privately to the Busches, Lasker—playing tit for tat—also made his end of the correspondence public. But his letter went beyond making his own case, and impugned the motives and the character of the Busches:
I believe you to be thoroughly selfish, and that you are acting in the hope of creating a public revolt against prohibition so that you may again revive the sale of your liquors, utterly regardless of how you might hurt the American merchant marine in your effort to create a situation to benefit your brewery.
It is, of course, notorious that the Adolphus Busch who founded your brewery was possibly the Kaiser’s closest friend in America, and that your family for many years has maintained a castle in Germany; your action in any event will not displease your German friends, whose greatest hope of a restored German merchant marine is in a hurt to American’s new-born merchant marine.
I refer to these extraneous facts not in resentment, but that it may be made clear that in my opinion you do not come before the bar of public opinion with clean hands.58
Lasker’s accusation that the Busches were seeking to undermine Prohibition was accurate enough. In that effort, they certainly weren’t alone: Representative James A. Gallivan—a Boston Democrat, a self-described “wet,” and already an established tormentor of Lasker—read the wine list of the President Pierce on the floor of the House of Representatives, making the point that this was just a particularly noxious example of how rich people could drink and poor people couldn’t.59 But by pointing to the Busches’ alleged German sympathies only four years after the end of a bloody war with Germany, and by invoking the much-despised Kaiser, Lasker went too far.60
Lasker committed another, more damaging blunder in his letter to Busch: he argued that as long as foreign ships could serve alcohol on their transatlantic runs, U.S. ships had to do the same to stay competitive. Congressional opponents of the proposed subsidy plan pounced upon this assertion. If U.S. ships could compete only by violating the Constitution, should the taxpayer be asked to subsidize such lawbreaking? Would next year’s Congressional appropriation for the Shipping Board include a line item for the purchase of substances that ordinary Americans couldn’t legally possess?
Ultimately, the strategy that Lasker’s opponents seized upon was delay. First, Republicans persuaded Harding to stall action on the Merchant Marine bill until after Congress’s six-week summer recess. Then, upon their return to Washington on August, they demanded that he not bring the bill to a vote until after the November elections. Finally, the Harding administration took the liquor issue off the table. In a sweeping October 6 opinion, Attorney General Harry Daugherty stated that no ships could carry intoxicating beverages in U.S. waters. The only exception, spelled out in the Volstead Act itself, was foreign ships transiting the Panama Canal from one foreign port to another.61
Lasker was “stunned.”62 Approached by reporters, he said, first, that of course the Shipping Board would comply with the Justice Department’s opinion. (Telegrams were dispatched to all Shipping Board vessels, ordering them to immediately stop serving alcohol and to dispose of their liquor in the first foreign port they reached.63) He then pointed to some of the practical problems that would grow out of the change. It would take months, or perhaps years, for the implications of applying U.S. law to foreign vessels to be worked out, during which time foreign vessels would gain a clear advantage over U.S. passenger liners.64 Montreal, he predicted, would enjoy a shipping boom; West Coast cities like Seattle and Portland would suffer a “severe blow.” And because “the immigrant . . . uses wine and beer as the American uses butter,” the immigrant trade—which represented most of the westbound traffic between Europe and the United States—would shift entirely to foreign ships. “Today’s decision,” he concluded, “makes immediate passage of the subsidy bill more necessary than ever.”65
But a vote on Lasker’s bill would have to wait until after the November elections.
The Man Who Sold America: The Amazing (but True!) Story of Albert D. Lasker and the Creation of the Advertising Century Page 27
