by Studs Terkel
The civil servants were competent people, but they worked within rigid formulas. They worked their hours and when they were through, that was it. The idea of sitting up all night….
The evenings were exciting. Social evenings were spent in discussing policy, in what you were doing. It wasn’t bridge playing. It wasn’t just idle drinking or gossip….
His wife, Sue, interjects: “The wives took a very dim view of men getting off in a corner talking about the levels of unemployment. The women were clustered together on the other side, but the husbands were so busy, so involved…. We took a dim view, I must say. (Laughs.)
“Every once in a while, we’d say, ‘What is it?’ We’d be interested. But it was very hard, because they were so terribly involved.”
(He laughs, then adds.) “It would get very technical, I must admit —shop talk.”
SUE: “We were interested in what our husbands were doing. We felt as they did, that it was terribly important. Although I remember once, when Joe’s boss called about something. They wanted me to look for a piece of paper on the desk. He said, ‘I hope you don’t mind my taking your husband weekends like that.‘ I said, ‘I certainly do.’ (Laughs.) When Joe came home, he said, ‘Oh, that was a terrible thing you said. After all, it’s for the war effort.’ This was in the late Thirties. (Laughs.) We understood the philosophical things—that was taken for granted. It’s the technical discussions that were so annoying. Other wives, too, felt part of this effort. But on a social level, it sometimes got difficult. They got so immersed in technical questions, the ceiling could have fallen in and they wouldn’t have noticed.” (Laughs.)
The ambitious young man today takes his work home, too. But it’s a question of himself, personal ambition. Not concern with society. Of course, some of our best operators were personally ambitious, but the climate was something else.
There was no difference between leisure time and work time. This doesn’t mean we didn’t go for a movie or go for a walk in the park. But the people I knew did not build a meaningful life outside of work. And action related to it, in some way.
SUE: “One of the nicest things in Washington, with all the other New Deal people, was that everybody lived on the same level. The notion of keeping up with the Joneses didn’t exist. Nobody was pushing for anything, because everybody was involved… .”
It was an exciting community, where we lived in Washington. The basic feeling—and I don’t think this is just nostalgia—was one of excitement, of achievement, of happiness. Life was important, life was significant.
Were there questions in Washington about the nature of our society?
I don’t think revolution as a topic of the day existed. The fact that people acted as they did, in violation of law and order, was itself a revolutionary act. People suddenly heard there was a Communist Party. It was insignificant before then. Suddenly, the more active people, the more concerned people, were in one way or another exposed to it. It never did command any real popular support, though it had influence in key places. This was a new set of ideas, but revolution was never really on the agenda.
F.D.R. was very significant in understanding how best to lead this sort of situation. Not by himself, but he mobilized those elements ready to develop these programs.
There are some who say F.D.R. saved this society… .
There’s no question about it. The industrialists who had some understanding recognized this right away. He could not have done what he did without the support of important elements of the wealthy class. They did not sabotage the programs. Just the opposite.
One of the first things the annual report of Morgan & Company dealt with, right after the war, was the question of full employment. This had been considered a Bolshevik idea five years earlier. Business leaders, in the early days of the war, saw the importance of developing more progressive programs. It was a way of rationalizing a corporate society. The New Deal did the same thing.
It was a very unusual Depression in the history of societies. It lasted so long and went so deep. Usually, when you get a depression—even a severe one—you get two, three years of decline and in another two, three years, you’re back where you were. But ten years … Just think, in 1939, we were back to the industrial production of ’29. And you had a ten-year increase in population. If it weren’t for the war orders from France and England, there’s a question if we would ever have hit that point. The war did end the Depression. That doesn’t mean that something else might not have ended it.
Burton K. Wheeler
Former Senator from Montana. In 1924, he was Senator Robert La Follette’s running mate on the Progressive Party ticket. They polled nearly five million votes.
I SAW the Depression coming. Joe Kennedy came to see me. He said, “I’m afraid I’m gonna wake up with nine kids and three homes and no dough.” I said, “Do you want to be safe? Buy gold.” He came to me again. “They’ve taken my gold.” I said, “Buy silver bullion.” He came down once more. “They’re taking my silver bullion.” I said, “Do you want to be perfectly safe? Go get a farm, where you can raise a cow and a pig and some chickens, and put some of those kids of yours to work. But don’t get too big, because we might take it away from you.” He said, “Is it as bad as that?” I said, “No, but it might get that bad.”
He recounted his experiences as a visitor in Vienna in 1923, as the Depressionthere affected all classes. “I didn’t think it would start as quickly as it did here in the United States.”
Hoover was President when they passed the Reconstruction Finance bill. I opposed it. Its purpose was to bail out the bankers, the insurance companies and the railroads. I said, “The pressure’s gonna be so great that anybody who’s got a sick cow is gonna come to Washington to borrow money.” Bob La Follette, Junior, said he’s voting for it, because he’s afraid there would be a crash. I said, “There would be, but the sooner it comes off, the better.” This RFC would only prolong it. The greater our indebtedness, the greater the crash.
Old J. Ham Lewis came up to me.116 He used to call me “boy.” That made me mad. “Boy, give ’em the devil.” I said, “Won’t you make a speech on it?” He said, “No, I can’t. I represent a damn bunch of thieves. Thieves, I tell you, who want to reach their hand in the public coffers and pull all the money out. My God, if I were a free man, I’d tear this thing limb from limb.”
I’d get pretty discouraged when the men in the cloak rooms would come up to me and say, “I agree with you.” Then go out and vote the other way. I remember one piece of legislation I was interested in. It involved a challenge to the big money powers. A Senator said to me, “I think you’re right. I’m gonna vote with you.” In the aftenoon he said, “I can’t.” “Why not?” “My bosses called me up.” “You have a boss that tells you how you’ve got to vote?” “Who’s your boss? You’ve got one.” I said, “The only boss I’ve got is the people.” He said, “Don’t give me that stuff. You’ve got a boss somewhere.”
When Tom Pendergast 117 was indicted, Harry Truman came up to me. “Should I resign?” I said, “Why should you resign?” He said, “They’ve indicted the old man. He made me everything I am, and I’ve got to stand by him.”
After Roosevelt’s election, I introduced a bill to remonitize silver. All the bankers of the country were against it. They were able to control the money much better with the gold standard. Some of the big mining companies out West were interested in my bill. For the wrong reasons. They were interested in raising the price of silver, but not in its use in money. The president of Anaconda Copper thought I was right—better silver than paper. There wasn’t enough gold to go around. I said, “Why don’t you say so publicly?” He shrugged his shoulders. I said, “You don’t dare say so, because you owe the National City Bank so much money.”
He recounts his disagreement with Roosevelt in the matter of court packing. During “the hysteria of the First World War, I saw men strung up. Only the federal courts stood up at all, and the Supreme Court better than any
of them. Not as well as they should have, but better than the others.” The aid of Associate Justice Brandeis and a letter from Chief Justice Hughes helped him in defeating Roosevelt’s effort. He nonetheless led the fight for some of F.D.R.’s social legislation.
I handled the Utility Holding Company bill. It was a hard-fought one. I was approached by a fishing companion: “These utility people are gonna destroy anyone who gets in their way.” A few days later, two of their chief lobbyists visited me. I said, “Have you got any guns?” They said, “No, your boy frisked us.” I said, “I told him to.” They said, “How much time you gonna give us?” “One week.” “We’ve got to have a month.” “I’ll give you a week, and the Government a week. If you can’t tell what’s wrong with the bill in a week’s time, that’s too bad.” They said, “You’re pretty cocky.” “No,” I said, “I’m just tired of crooked lobbyists and crooked lawyers.”
He was pressured by colleagues of Roosevelt to accept the candidacy as Vice President for the 1940 campaign. “Justice Murphy came from the White House. ‘The President will call you up.’ ‘I won’t take it.’ ’You’re the biggest damn fool I ever met. You’ll be President of the United States.‘ ’I can’t take it.’ ” He was opposed to what he felt were Roosevelt’s “war policies.”
I had seen Roosevelt in ’39. I told him it would be a mistake if he ran for a third term. He agreed. He said to me, “Burt, along about January or February of next year, we’ll pick out somebody who can win. I’m tired of supporting some of these old reactionaries.” And then he said, “Farley would like to see Hull run, and he’d like to run as Vice President. He doesn’t think Hull would live through it. That’d make him President. Cardinal Mundelein told me that even though he’d like to see a Catholic President some day, he didn’t want to see him come in the back door.” That Roosevelt was really a master.
David Kennedy
Secretary of the Treasury. 118
“I came to Washington in September of ‘29 to attend law school. I joined the Federal Reserve Board in April of 1930. Marriner Eccles came in’33 as Governor of the Board.
“He laughs about that. He said, ‘I’m from Utah, too. Did you know me?’ I said, ‘Yes, I knew you, but you didn’t know me. I was a boy, and you were a man in a dark office,.’ He said, ‘Well, I can’t be blamed for bringing you.’ I said, ‘No, but I can be blamed for bringing you.’ ”
MY FIRST WORK was with the story of bank failures. In 1933, when President Roosevelt came in and declared a Bank Holiday, we worked day and night. We had three days in which to license the banks which were solvent. We had to get reports from the various states, Federal Reserve banks, the Comptroller of Currency and individual banks. From all over the country. I never left the office those three days. I slept on the couch and had sandwiches brought in.
We had a number of very famous cases, considered on a twenty-four-hour basis, as to whether they should open or not open. It was a matter of judgment. Two major banks in Detroit remained closed, because it was determined they were not solvent. Borderline cases were permitted to open.
There were three days of openings. Major banks in large cities were opened one day. The next day, the Reserve cities—the rest of the banks on the third day. In those three days, the field examiners knew the banks and knew their stories. It was not just starting from scratch. They’d been studying them day by day as these problems were developing.
The Bank Holiday was probably the most dramatic happening in the history of the financial world. It shocked many people. What was going to happen? Was this it? But once it was considered in realistic terms, it was accepted by the people on Wall Street and around the country, as a period in which to get your house in order. It gave the bankers themselves a chance to consolidate their resources.
All through the Twenties, they were having about six hundred banks a year close. Before the Crash, when conditions were booming. People don’t realize that. In ‘29 and ’30, they got into the thousands. Closings every day. There was one bank in New York, the Bank of the United States—in the wake of that closing, two hundred smaller banks closed. Because of the deposits in that bank from the others.
We had the problem of reconstructing the banking laws. In a serious Depression or a forced sale in bankruptcy, what is anything worth? It’s worth only what somebody will pay you for it. Values just tumble away down. So Marriner Eccles conceived the theory of intrinsic values, whatever that means. There must be some basis, other than paper, on which an examiner can determine whether a bank should stay open.
This was difficult to sell the accountants and the bankers. But the Banking Act of ’33 was passed, and they started to follow that theory. It permitted the Federal Reserve to lend on any sound asset. Before, they had the commercial paper theory—you could lend on certain things. And banks ran out of collateral for borrowing purposes.
Then the FDIC119 was established. It gave confidence to the man on the street that his bank would not fail, and if it did, he was insured up to $10,000. That was part of the Banking Act of ’33.
The Banking Act of ’34 was much more fundamental. It gave our whole Federal Reserve System a better basis. This caused a fight between Marriner Eccles and Carter Glass.120 They had different philosophies. Mariner was one of the original advocates of pump-priming. Glass was of the older school. Marriner loves an argument, and he was able to get most of his recommendations approved. It was a great victory for him.
He recounts the defeatist attitude, as he saw it, of the early Thirties. “Every one that we talked to, in the schools, in the universities, would have very little vision of what this great country and its resources could do. We had studies going on, in housing, in education, in various public works, in order to stimulate the economy.
“We were all affected. by the Crash. My salary was cut fifteen percent. I was supposed to get a raise. There were thirty-five applicants for the job when I was hired. I was promised a substantial increase at the end of my six months’ trial period. The man in charge of my division came to me and said: There’s a freeze on all salaries in the Federal Reserve. The Government had done it, and even-though the Board was independent,121 it’d go along. He said he’d make it up when the crisis was over.
“Finally, when the Banking Act of ‘33 was passed, he made two exceptions. I was one of ’em. After three years, I got a $600 increase. I learned what the word ‘substantial’ means.” (Laughs.)
1937 and 1939 were interesting periods. We hadn’t come out of the Depression. It was deep-set. The Board increased reserve requirements of member banks because they had large excess reserves. We made studies showing that only a very few banks would be affected by this increase in requirements. Then we got a real turn-down.
There was a very, very serious recession in ’37. Marriner spent a good share of his time trying to prove to the public that it was not caused by the Federal Reserve action. Critics said it was.
We had a serious break in the market, when war broke out in Europe in 1939. A problem in securities. The Federal Reserve Board said it would buy all the securities that were offered, no matter what the volume, at the market price. That stopped the avalanche of sales. The market settled down, and we got through that.
We really had not made a substantial recovery from the deep Depression of the early Thirties. Unemployment was still very high. The New Deal programs were not stimulating the way people thought. There was sort of a defeatist attitude—that the Government just had to do all this for the people. It was not until the war, with its economic thrust, that we pulled out of it. The war got us out of it, not the New Deal policies.
As a matter of fact, the policies pursued could have thrown us into real trouble. It was changing our way of life. You’re spending money and going into debt, but you’re not really finding ways and means to explore new projects. Like today, we’re in an explosion of ideas.
Despite all the programs—PWA,WPA,FSA … ?
It took care of immediate suffering in part of
the areas. I’m not criticizing it in that sense. But it didn’t pull the thing up so that private enterprise could take its place and replace it.
You applied the word “defeatist” to Roosevelt’s as well as Hoover’s time….
Roosevelt gave us quite a bit of hope, early. He probably saved us from complete collapse, in that sense. But he did not answer the things. Many of his programs were turned on and off, started and stopped … shifting gears. Because we had never been in anything like this.
Planning had not been done. So they’d go out and sweep the mountains and clean up the debris, and then the wind comes along and blows it back again. It gave some work. But the people that got the money, in some ways were benefited and in other ways were hurt. They didn’t like to see the waste…. They had mixed reactions.
We have a ranch in Utah. In 1933, we had a serious drought. Anyone that lived out there can tell you it nearly broke all the ranches in the area. I was on the ranch this day with my father. We had cattle coming in from the range land, thirsty, without food, getting down to the water. We’d gather these up and sell them to the Government. They’d pay from $4 to $20 a head. If the animal was alive, you’d get $4. If it was a good animal, you’d get up to $20.
They drove up, the buyers from the agricultural department. There were seven of them in this one car, on Government pay. There was an argument over the value of one steer, which was as perfect an animal as any I’d ever seen. They didn’t want to give but $16. My father said it was $20 or nothing. After some argument with the seven men, they gave it. Before the Government was in on this, we’d sell all our cattle to a buyer, one man. Here were seven. The people out there got the feeling this was just Big Government, a make-work thing. These things tended to create a defeated attitude.
Do you recall any change in the Washington atmosphere, during the time you were there, between the last days of Hoover and the early days of Roosevelt … ?
