***
Roosevelt extended the national moratorium while the Treasury separated strong banks from the weak. After the passage of Thursday’s bill Woodin invited applications for permission to reopen; actual openings would start Monday. It was the next week that killed Woodin—he was under a doctor’s care before it was over, and in his grave the following year. Yet despite his heroic effort, the staggering task of examining 18,000 institutions would have been impossible without the technical knowledge of the Republicans, who stayed at their desks. Awalt, in the first few days, returned home only to shower and change his clothes; James Douglas, who had been assistant secretary under Mills, served as the contact man with the twelve Federal Reserve Banks, forty state banking departments, and clearinghouses everywhere. In the whirlwind tempers were short, but did not follow party lines. “We were,” Moley later recalled, “just a bunch of men trying to save the banking system.”
In New York on Monday, all but nine national banks were allowed to reopen; in Philadelphia, all but six. At the end of the week 13,500—seventy-five percent—of the country’s banks were back in business, and the sweet notes of gongs again were heard in stock exchanges. Price rises on the Chicago Board of Trade strained at the legal limit, and in New York stocks jumped fifteen percent. We have John T. Flynn’s word for it that the New York ticker clicked off the message, “Happy Days Are Here Again.”
Of course they weren’t really. One dollar in every ten was tied up in frozen deposits on March fourteenth—when the Bureau of Internal Revenue finally agreed to give income-tax payers sixteen days grace—and as late as October the government still was trying to reorganize 376 banks. But the panic had been ended without currency chaos or nationalization of the banks. Undoubtedly the medicine had been strong; the inflationary movement, once started, was irresistible; in April America left the gold standard. The months that followed saw an entirely new concept of the economy developed in the NRA, AAA, CCC, the Federal Securities Act, the Stock Exchange Act, and, in 1935, the Public Utility Holding Company Act. The power of the bankers had been irrevocably broken.
It was in Roanoke, Virginia, that J. P. Morgan was discovered during the holiday on his annual automobile trip south. He was shy as ever, and declined comment on the Depression. He did, however, remark that he was glad the morning’s fog was lifting.
“I like to read the signs along the road,” he said.
Slumlord
A man I shall call Dan Marner, a typical metropolitan slum landlord, once had a friend. He was a real friend, not just another useful contact in the local Bureau of Buildings or land-record office, and before he and Dan broke up over a roofing contract he gave him a Christmas present. It was a game of Monopoly.
Dan never used it. He studied the rules carefully and then shelved it. For several years it has lain in a ledger case beside his scarred desk, gathering office dust. “It was those ‘Community Chest’ cards you got to pick,” said the estranged friend later. “Dan Marner couldn’t bring himself to give anything to charity, even in a game.”
Dan himself explains that the game sounds foolish. To him it probably does: In Monopoly, the winning player usually must acquire the most expensive properties on the board—“Park Avenue” and the “Boardwalk.” Dan knows that real estate doesn’t work that way. In the twenty years he has been working the shabby side of his city’s map, he hasn’t had to pay the “Community Chest” or “Go to Jail” once, and he has been a consistent winner. On paper, indeed, he is a millionaire, the title owner of 327 deeds. Each month he grosses $6,000 from rents and auxiliary sources. His expenses are comparatively small—his three sons act as office and field assistants, slum tax assessments are low, and Dan never repairs houses voluntarily.
At seventy-two, Dan is a dour, bespectacled man, wise in the ways of the drab districts that dot every metropolis on the eastern seaboard—districts built before World War I, paved with Victorian cobblestones, and peppered today with pawnshops, cut-rate drugstores, and warped doors bearing the crudely chalked names of tenants. The increase of traffic in the interiors of cities long ago sent the original householders to suburbs on the perimeter. Into the vacuum they left, men like Dan moved—first as managers, later as landlords.
Dan’s headquarters is in a dingy office building on the edge of the slum. There his tenants—some black, some white—bring their weekly money and wait in line while his sons stamp their rent books, which are small and black and resemble bankbooks. Some tenants send money orders, but none mail cash. Long ago they learned that since there is no record of a cash mailing, they have no recourse if Dan tells them their envelopes have been lost in the mails. Like many professional slum landlords, he has a reputation for sharp practice. The office building, which he shares with several competitors, is known in the trade as “the Den of the Forty Thieves.”
Dan’s reputation doesn’t affect his business, and so it doesn’t bother him. Within obvious limits, he is candid, and he will open his records to the outsider who guarantees him anonymity. They reveal that his typical house was built about sixty-five years ago, is on the outskirts of the downtown area in his city, is overcrowded, lacks plumbing, has no central heating, and frequently lacks heating equipment altogether. Dan rents it for $56 a month. It costs the occupant $18 more for utilities, which means that the typical tenant spends a quarter of his income on housing characterized by defective wiring, blind rooms, an outside toilet, a leaking roof, and massive rat infestation.
Unless he is goaded by the law, Dan pockets the two percent depreciation allowed him under the Federal tax laws and mends nothing. Suggestions that he should do otherwise baffle him. To Dan, his career is not merely defensible; it is admirable.
“What I did,” he says, peering over his steel-rimmed glasses at the files of paying tenants, “any of them could do.”
That is a difficult argument to answer, because it is literally true. Like most of the other Forty Thieves, Dan is a product of the slum. His rise is a kind of twisted Horatio Alger story. Tubercular as a youth, he left school in the seventh grade, married early, and was earning $18 a week in a canning factory when the Depression threw him on relief. In 1934, after two years on the dole, he rented a vacant house, agreeing to clean it for the first two weeks’ rent. He swiped a rusty bedspring from a junkyard, set it up on four soapboxes, and advertised a room for rent. Saving his coins and assembling other makeshift beds, he converted the vacant building into a profitable flophouse.
The owner of the house, an elderly woman who had inherited money and moved to a suburb, admired Dan’s ingenuity. She owned five occupied buildings in the same block. Times were hard, the occupants were in arrears, and she appointed Dan her rent collector. He was so persistent at extorting money from his neighbors that one, in exasperation, slugged him. The story made the papers. The public may have disapproved of Dan’s methods, but other absentee property owners decided he was just the man they needed. He became the busy manager of several estates, charging, under standard practice, a five percent commission on the rents he collected.
Actually he charged much more, if those who knew him then are to be believed. According to them, Dan, knowing that absentee landlords rarely visit their properties, extracted money from them for repairs he never made. At the same time, it is contended, he jacked up rents on his own authority and kept the difference. Dan admits none of this. But it is a matter of record that in two years he had saved enough to buy his first house, a dilapidated two-story building offered by the city in a tax sale.
The following year he bought his second house in a low-income white neighborhood. Dan moved a black family in and took advantage of the neighbors’ panic to buy four more homes in the same block at bargain prices. He had to mortgage everything he had to do it, but today the street is a respectable black district, a faithful producer of weekly money orders. He has acted as a “blockbuster” on several occasions since, serving as an incidental agent of desegregation.
Dan goes into debt frequent
ly. Every cent he makes is invested in new property. In courthouse circles he has a reputation for not being able to answer a judgment without selling a house. If a house becomes burdensome, he usually finds it profitable to have the mortgage foreclosed. He will keep it until he has cleared his investment and then cut off payments to the building-and-loan association. Occasionally the auctioneer will fail to meet his expectations, and he will be obliged to pay the association a small deficiency decree, but as a rule he finds foreclosure cheaper than a broker’s commission.
All other things being equal, Dan prefers black tenants to white. Blacks, confined to the slum by social pressures, are of all types. White families can live elsewhere, however, and those he gets are inclined to be irresponsible. There is one exception to this: the handicapped of all races are sound risks. Late in the 1930s, for example, Dan took in a veteran of the Argonne, a chronic victim of combat shock. The man, unmarried, received $125 a month from the Veterans Administration. He regularly turned his check over to Dan, who saw to it he was supplied with coffee and beans from the corner grocery until his death, which Dan deeply regretted.
Exploiting the handicapped may seem beneath a millionaire, but Dan doesn’t look at it that way. “Life is dog eat dog,” he says, shrugging and spreading his hands. “It’s survival of the fittest.” His fortune has been built from stacks of small change, and no device is too petty for him. If a Department of Highways inspector insists he repair one of his sidewalks—a twenty-five-dollar job—Dan dutifully takes out a Bureau of Buildings permit, indicating that he intends to do the work. The permit costs one dollar and gives him thirty days’ grace. By then the inspector is looking over another neighborhood. When he returns next year and finds the walk worse, Dan will explain that he has been unable to find a contractor. He will take out another permit as evidence of his good faith. He is prepared to go on from permit to permit, always promising and never performing, to avoid paying that $25.
On the other hand, he knows all his rights. Since Dan’s days as a rent collector, the city has established a small-claims court, and he is one of its steadiest customers. In theory, the court is for taxpayers who cannot afford to press extensive suits. Actually, two-thirds of its docket entries are rent cases, with the city acting as agent for complaining landlords. If the tenant falls into arrears, Dan drops into the court, fills out a slip, and pays a one-dollar fee. A policeman then serves a summons on the tenant. Most occupants of slum homes are terrified of authority. Frequently the lax tenant will borrow the cash that day and rush to Dan, who will also recover the one-dollar summons charge from him.
Dan’s big property gains were made during World War II. On the eve of Pearl Harbor, he was worth about $100,000. He held title to thirty-four houses, acquired at public tax sales, from out-of-town heirs unfamiliar with local values, or from hard-pressed owners needing quick cash. Each month, his records show, he was grossing between $850 and $900 in rentals, and he was branching out. He had become a professional bondsman, pledging his property as collateral. His eldest son hung around police stations soliciting business. Dan always made certain his bonds were secured by chattel mortgages, and he always demanded the maximum legal interest—ten percent in Federal court, five in local courts. Each year he met a score of bonds and took in upward of two thousand dollars in bail fees. He had plenty of free capital—too much, indeed, to suit him. “I was uneasy,” he says. “I figured someone would find out and make an excuse to sue me for something.”
Unfortunately, investment opportunities were limited. The specter of competition was rearing its head: other landlords were bidding against Dan at auctions, and the market was tight. He wanted to pioneer a new field by buying a block of Victorian mansions on the slum fringe and converting them into apartments, but the zoning statute prohibited it. Then, at the appropriate time, the Japs attacked. War industry boomed, and the city was invaded by Southerners who wanted to work but had no place to live. Dan took a plunge. He bought the block, went to the zoning-appeals board, and explained he would house the war workers if the board would overlook the law. It worked: His peculiar contribution to the war effort was accepted.
“I didn’t get the Army-Navy ‘E’,” he recalls, “but I got a precedent, and in 1946 I got rid of all those hillbillies by moving one black family in.”
Dan’s one serious challenge has come from the local Health Department. Late in the war the department set up a housing bureau, and under its leadership a team of inspectors invaded the slum, looking for infractions of the law. In one fourteen-block area, with 791 properties, they found 13,589 health, building, fire, and electrical violations. Notices were issued ordering repairs, and the team moved on, checking off kerosene space heaters, outdoor hoppers, exposed wiring, and sagging walls. A week later they struck the first of Dan’s blocks.
The campaign was a real threat to him. Structural repairs are expensive—mending his houses properly would have taken more money than he had, or so he now says. He began by protesting that his property rights were being invaded, but the inspectors had strong public support. Protest failing, Dan quietly told each of his tenants he could buy the house he was renting with no down payment. The terms were farcical; Dan retained the deeds, and he was permitted to cancel the contract if one weekly payment was one day late. Most occupants fell for the “buy-instead-of-rent” gimmick, however, until Dan started forwarding Health Department notices to them. Ownership, he piously explained, implies responsibility.
The department argued that Dan was still the landlord, and a legal battle opened to determine where ownership really lay. Meanwhile, Dan had opened a contracting sideline. He outfitted a man in neat white coveralls, with the word INSPECTOR embroidered over the left breast pocket, and sent him out to trail bona fide Health Department inspectors. After the Health Department men had gone, Dan’s “inspector” would call and ask the bewildered tenant if he might look at the house. Usually he was admitted without question.
Inside, he would explain that this or that had to be done. When the frightened occupant, thinking of himself as the house’s owner, asked where repairmen might be found, the “inspector” said he had friends who did work at cut-rate prices. The prices were, of course, inflated, for Dan extracted a referral fee from the plumbers and roofers he sent out. Under this ingenious arrangement, the repairs were not only made; Dan made a profit on them. According to one report, Dan’s “inspector” dismantled a furnace one bitterly cold day, left, and returned the following day with an installment-sale furnace contract. The shivering householder signed.
The courts decided that Dan, as deed holder, was legally responsible. Since then he has been erecting cardboard partitions and installing inferior wiring—doing the work, in short, but in the worst possible fashion. The Health Department keeps after him, and he has paid a few ten-dollar fines for failure to comply with its notices. But he is still the winner. Ten years after its ambitious opening, the department’s campaign is hopelessly bogged down in detail. By fighting it every step of the way, Dan is defeating it.
Outside the Health Department and a few civic organizations interested in slum clearance, there is little local interest in Dan. The business community is almost wholly indifferent. Some of its members, one suspects, secretly admire him. They think of him as a shrewd trader, a self-made man, an individualist who is defying bureaucracy and managing to get away with it.
Dan is all those, and more. He is a symbol of the spreading rot in metropolitan areas, and his story has as many implications for economists as for moralists. Since 1935, when Dan bought his first house, the assessed value of his properties has dropped twenty-seven percent, meaning his municipality gets nearly $8,000 less in taxes from them each year. The city is spending forty-five percent of its income in the slums and getting six percent of its taxes there.
The forty-five percent is spent in many ways. The neighborhood Dan converted to apartments during the war now leads the city in juvenile delinquency, with twenty cases per thousand population
annually. About one-third of the city’s inhabitants live in the slums, but they account for eighty-three percent of its syphilis and seventy-one percent of its tuberculosis—one of Dan’s blocks has five active TB cases today. The cost of slums in petty thefts, bastardy cases, and social parasites is incalculable, but census figures show that eighty-one percent of the welfare cases are concentrated there.
Dan’s admirers may not know it, but they all contribute to his loot through the relief rolls. A home-owner with an assessment of $10,000 pays the equivalent of three weeks’ rent each year in taxes. Through their unfortunate tenants, Dan and his colleagues get a big slice of this.
Such implications have no interest whatever for Dan. His outlook is expressed in a few catch phrases: dog eat dog, tooth and claw, survival of the fittest. He came up the hard way, and he argues anyone else can do it, though if pressed he will modestly admit that stamina, brains, and what he calls “realism” are necessary for success.
The Founding Grandfather
Fifty-six floors above Manhattan’s Rockefeller Center, William Couper’s bust of America’s first billionaire gazes out stonily on the private offices of his four surviving grandsons. Those who knew him in his later years find the likeness striking, for at the end of his life John Davison Rockefeller (1839–1937) had a remarkably graven look. He is remembered as a wrinkled, bony nonagenarian who distributed 20,000 dimes to strangers—he started with nickels but found them too heavy—and spent his last days among the black parishioners of the Union Baptist Church in Ormond Beach, Fla., chanting prayers and reedily affirming in his quavering tenor that when the roll was called up yonder, he’d be there.
Controversy And Other Essays in Journalism (1950–1975) Page 25