Prelude to Power

(See front cover)

When the Depression broke over the high head of the Republican Administration in 1929, President Hoover called to the White House a swarm of bankers, financiers, businessmen, industrialists, railroaders, labor leaders, farm spokesmen. In the privacy of his study, one by one, he asked them what he should do in the economic emergency. Almost to a man his visitors told him to sit tight, keep smiling, let the tempest blow itself out. For nearly two years he followed their advice.

Last week many of the same advisers were back in Washington, this time to tell the incoming Democrats how to save the nation. Parading before the Senate's powerful Committee on Finance they spoke what was supposed to be the keenest, soundest thought of the country.

Their remarks were not addressed to Utah's grim, bespectacled Reed Smoot who as the committee's Republican chairman sat nodding at the head of the long green-baize table. He is a lame duck, soon to fall from his roost. Nor did the witnesses talk to impress Michigan's white-crested Couzens or Pennsylvania's sad-faced Reed or Wisconsin's pompadoured La Follette. All these would soon be in an impotent Republican minority. The man the witnesses knew they were talking to was the tall, rangy, half-bald Democrat who slumped in his chair at Senator Smoot's left--Mississippi's Pat Harrison. After March 4, Senator Harrison will move into Senator Smoot's highbacked seat at the top of the table, become ruler of the committee that fixes the nation's taxes and tariffs.

As witnesses filed past, Senator Harrison sucked softly on a big cigar, rubbed the palms of his long, bony hands together, beamed self-satisfaction through his horn-rimmed glasses. Like an eager runner who beats the starting gun, he had not waited for March 4 and the change of administration to start this parade of economists, financiers and industrialists at the Capitol. He had gotten the Senate to adopt his resolution calling for an investigation of the Depression at once. In his forehandedness he had a double purpose: 1) to stall off radical legislation at this session; 2) to give the Roosevelt Administration all available ideas on relief as early as possible.

"Balance! Balance!" During the first week of the hearing Big Business ding-donged one idea into the Senators' ears: BALANCE THE BUDGET. Witness after witness from Wall Street could see no salvation for the country until the Government ruthlessly cut expenses, lived within its income. To this necessity they subordinated foreign debts, tariffs, jobless relief, railroads, public works and the large variety of panaceas put forward by more imaginative but less substantial citizens. Bernard Mannes Baruch had sounded the keynote the opening day: "Put Federal credit beyond peradventure of a doubt. . . . No nation ever dared to incur deficits as large as ours. The suspicion is growing that we do not really intend to balance the budget."

Mr. Baruch also sent chills of fear down Senatorial spines when he solemnly warned: "I regard the condition of this country as the most serious in its history. It is worse than war."

Before the committee came burly Jackson Eli Reynolds, president of First National Bank of New York, and Myron Charles Taylor, handsome board chairman of U. S. Steel. Their harping on the benefits of a balanced budget vexed the committee, but when Senators badgered them with pointed questions as to how & where income and outgo could be evened up, neither witness had an answer. Times & Sense. Declared Banker Reynolds: "I don't believe in the omniscient power of any man to point the way out of this situation. . . . Ninety-nine out of 100 persons haven't good sense. In good times they are willing to take big risks. A seeming prosperity gives them a sort of dementia. Anybody would borrow then. We can't get anybody but the feeble-minded to borrow now. .'. . I think I can pay my debts but I know a great many people who will never be able to pay theirs. . . . There'll be a considerable revision of debts."

Steelman Taylor was nonplussed at the point-blank manner in which Senators questioned him. He retreated behind generalities: "I think the surplus of raw materials is our greatest menace. . . . Industrialists are a confident people, a hopeful people. They believe in the future of this country. We're trying to find the remedy."

Other Ideas from other witnesses: Publisher Paul Block--"I would suggest a coalition Cabinet ... a small manufacturers' sales tax ... a $4,000,000,000 bond issue for public works."

Economist Herman Arendtz of Boston-- "Immediate relief is necessary to prevent banks, railroads and insurance companies from collapsing. . . . The capital structure has got to be reduced. ... I favor a 'token dollar' by which silver would be remonetized within the bounds of the gold standard."

Edward Dickinson Duffield (Prudential Life Insurance Co.)--"It's difficult for Congress alone to cure things. . . . Modification of debtor-creditor contracts often are needed and justified but to destroy the obligations attaching to such contracts will weaken the entire basis of our system. A 70-c- dollar wouldn't be so bad if businessmen were sure that it would be maintained as a 70-c- dollar."

John Francis ("Red Mike") Hylan, one-time Mayor of New York--"The greatest sham of the age which has made all mankind its victims has been the plan of inducing foreign governments to adopt the gold standard under the pretense of stabilizing their currencies and then making them large loans at high rates of interest."

John William Davis--"I have nothing to offer, either of fact or theory. As the Depression is not due to any single cause, unless it be human folly, I am sure it cannot be cured by any single remedy."

Alfred Pritchard Sloan Jr.--"I find that my thinking is so entirely out of harmony with that of the leaders of Congress that I feel I would only be wasting the time of your committee."

George Horace Larimer--"All my views have been published in The Saturday Evening Post."

David Franklin Houston--"I see no other solution than a unified banking system."

John Llewellyn Lewis (A. F. of L.)-- "A horde of small-time leaders in industry and finance looted the purse of the population."

Louis John Taber (National Grange)-- "Agriculture is suffering from iron debts and rubber money."

Only occasionally did Senator Harrison dip into this flow of testimony. Once he got a vigorous assent from Mr. Duffield when he asked: "If the coming special session got to work, composed its differences, balanced the Budget, passed constructive measures and then adjourned quickly, in two months, would not that have a good effect on the country?" And Pat Harrison jokingly advised Mr. Houston to "get off that subject" when the onetime Secretary of the Treasury began to hector Senator Smoot on the evil effects of the Hawley-Smoot Tariff Act. But for the most part Senator Harrison sat back and listened, with what seemed to be complete agreement, to the expression of conservative business opinion.

A Cross-Cut of the first week's hearing suggested these conclusions: 1) currency inflation is the biggest fear of U. S. business; 2) R. F. C. has been a sharp disappointment; 3) the Government is pouring money down a rathole in trying to support 1929 capital values; 4) first-raters are more humble in presenting their remedies than second-raters; 5) it is easier to criticize Congress than to advise it.

Pat Harrison. The important part he will play in the leadership of the new Democratic Senate has done much to sober Pat Harrison and tighten his loose-hitched tongue. At 51 he has become almost owlish under the prospective burdens of statesmanship. The great lung capacity he first developed as a barefoot boy hawking the Memphis Appeal & Avalanche about the dusty streets of his native Crystal Springs, Miss, seems to have deserted him. He still makes windy speeches outside Washington about "mah countree" and views Republican doings with "amaze-munt" but he is no longer the Senate's loudest wit.

He was christened Byron Patton Harrison but Pat has become his common-law name. At Louisiana University he earned his tuition as a mess hall waiter while pitching on the college baseball team. Later he taught school, studied law, served as a local district attorney and, at 29, was elected to the House. In 1918 he performed a political miracle by defeating notorious James Kimble Vardaman for the Senate and taking over the seat once occupied by Jefferson Davis. His first ten years in a Republican Senate were ones of irresponsible fun at the expense of the G. O. P. He teased and tormented Henry Cabot Lodge. He smeared President Harding with mock sympathy. He tweaked and twitted President Coolidge. He first put in circulation the "dammed, drained and ditched" joke on Engineer Hoover. But his gibes were always in loud good humor and after a particularly spirited attack he would stroll off to a ball game arm-in-arm with Republican Leader Watson. Always the smart politician. Democrat Harrison played close to the Brown Derby in 1928, was an early passenger on the Roosevelt bandwagon.

Since early in December, businessmen have been flooding Senator Harrison with mail and messages to establish friendly relations with the next chairman of the Finance Committee. Few of them really had anything to fear from him. On taxation he opposes a Federal sales tax (though his own Mississippi has a State one), is inclined to go to the income-tax-paying class for more revenue. A vociferous foe of Republican protection, he is a red-hot supporter of President-elect Roosevelt's reciprocal tariff scheme. Under his chairmanship Industry can expect deep cuts in its protective rates but Agriculture will be kept well inside the wall. On War debts he is relatively open-minded, except in the case of France. Once, traveling in Europe, he was stopped at the French border and fined for trying to smuggle a box of cheap cigars. A Dry turned Wet, he expects to raise large sums from the legalization of liquor.

And Colleagues. The new Senate in which Senator Harrison will be the leader on Government finance is composed of 59 Democrats, 36 Republicans, one Farmer Laborite. At the head of the Chamber, with Vice President Garner on the rostrum to help him steer, will be Arkansas' ruddy, rugged Joseph Taylor Robinson who has gamely forgotten his own unsuccessful run for the Vice-Presidency in 1928. For all his red-faced bellowing Leader Robinson is at heart a level-headed conservative who will do his utmost to keep the Roosevelt legislative program on the track. The same quick temper which once set him fighting on a Washington golf course is Leader Robinson's greatest handicap in uniting his followers.

Committee personnel will depend upon which Senators President Roosevelt picks for his Cabinet. Virginia's Glass having refused the Treasury, he will remain. The drafting of Montana's Walsh, and Tennessee's Hull would not only weaken the Democratic leadership on the floor but also strip the committees on Judiciary and Finance, respectively, of their strongest members.

This file is automatically generated by a robot program, so reader's discretion is required.