In his speech accepting the Nobel Prize—an award he coveted even at the earlier time when he had declined a Pulitzer—Lewis excoriated the American literary establishment and especially the “writers for the popular magazines who in a hearty and edifying chorus chant that the America of a hundred and twenty million population is still as simple, as pastoral as it was when it had but forty million; that in an industrial plant with ten thousand employees, the relationship between the worker and the manager is still as neighborly and uncomplex as in a factory of 1840, with five employees; that the relationships between father and son, between husband and wife, are precisely the same in an apartment in a thirty-story palace today, with three motor cars awaiting the family below and five books on the library shelves and a divorce imminent in the family next week, as were those relationships in a rose-veiled five-room cottage in 1880….”
Back home, as Mark Schorer said, dudgeon was high after this address. Lewis had never feared to state—often to overstate—his case, and he would not stop now, at the pinnacle of success. Nor had the establishment feared to take him on. In Elmer Gantry, Time said, Lewis had made “another large roundup of grunting, whining, roaring, mewing, driveling, snouting creatures,” whom he could “beat, goad, tweak, tail-twist, eye-jab, belly-thwack, spatter with sty-filth and consign to perdition.” But the most telling attack on Lewis came from Walter Lippmann, who was so upset by Harcourt Brace’s ballyhoo for Elmer Gantry that he broke off his relationship with the publisher. In Men of Destiny, Lippmann wrote off Lewis as puerile, shallow, overrated, propagandistic, and a greater bigot than the characters in his novels. The big question, Lippmann concluded, was whether Lewis would reach maturity or remain arrested in adolescent rebellion.
Lippmann’s attack on Lewis typified the hostility among literary men during the twenties. Though Lewis made generous references to Dreiser and other fellow authors in his Nobel and other addresses, he attacked them in personal talk and correspondence. Solidarity was almost wholly lacking within the American literary firmament. The writers were isolated and, in part because they were isolated, they were vulnerable to the very forces they caricatured in their writings—the censors, the puritans, the bluestockings. And, typically, fiction writers scorned politics except for occasional causes.
John Dos Passos brilliantly limned persons in their economic struggles and class positions, and in his middle years he took a militant role in left-wing causes, but he did little to explore the implications of his graphic writings for class struggle or political action. There was little on politics in his first great success, Manhattan Transfer. “The book,” Granville Hicks wrote, “is directed against a way of life, not a political or economic system—against greed and conformity and pretentiousness.” It was said later that Dos Passos had omitted only the external class struggle and that within his characters the class struggle was waged constantly, but this inclusion still left his characters with crises of individual morality rather than the catharsis of collective communication and political action.
Dos Passos’s views flowed far more from Whitman and Veblen than from Marx, as he admitted. Whitman’s faith in the capacities of individual man and Veblen’s faith in the value of workmanship seemed to stay with Dos Passos throughout his life. Yet, as with Jefferson’s individualism, this faith could co-exist with a variety of diverse social attitudes and political strategies. Dos Passos was the first major American writer, according to Jack Diggins, “to develop a purposely fragmented narrative style in order to convey the frantic tone and mechanical temper of modern technological society.” He hated establishments, left and right, and establishment leaders like Woodrow Wilson. In The 42nd Parallel, the first volume of his trilogy U.S.A., he began to develop his master portrait of Americans caught in the rhythms, machinery, organizations, and structures of the Machine Age. But there seemed no way out, whether through individualism or communism—both of which Dos Passos simultaneously embraced.
Many other novelists in the twenties were sensitive to class differences and social prejudice but silent about possible political implications. Like Edith Wharton earlier, F. Scott Fitzgerald had a love-hate attitude toward the world of the rich and established. “Let me tell you about the very rich,” he wrote in his story “The Rich Boy” in 1926. “They are different from you and me. They possess and enjoy early, and it does something to them, makes them soft where we are hard, and cynical where we are trustful, in a way that, unless you were born rich, it is very difficult to understand. They think, deep in their hearts, that they are better than we are because we had to discover the compensations and refuges of life for ourselves. Even when they enter deep into our world or sink below us, they still think that they are better than we are. They are different….”
The rich for Fitzgerald were nevertheless careless and even brutal, as well as vacuous and vulgar: Daisy’s voice “full of money,” Gatsby reverently displaying his fancy imported shirts, the “diamond as big as the Ritz,” Gatsby’s weekend entertainments full of champagne and yacht trips and Rolls-Royces, the eight servants and “extra gardener” required on Mondays to clean up his estate after the ravages of the night before. Still, this was nothing to campaign against. Life was largely a personal affair. The question of politics hardly existed for even the class-conscious writers; as Fitzgerald himself said, it was “characteristic of the Jazz Age that it had no interest in politics at all.” A character in The Beautiful and Damned tried to imagine himself in Congress “rooting around in the litter of that incredible pigsty,” associating with mediocre men spouting puerile ideas and copybook ambitions in “the lustreless and unromantic heaven of a government by the people….”
Government by the people. At the very least, this meant a government by majority rule that respected personal liberties, due process, the rights of unpopular minorities and individuals. In August 1927, at the height of the Gay Twenties, there occurred an event that shook people’s faith in American justice. This was the execution of Nicola Sacco and Bartolomeo Vanzetti, Italian aliens, draft-registration evaders, and admitted anarchists, who had been convicted of murder after a trial that violated fundamental tenets of procedural and substantive justice. Challenged by the liberal and labor press (though not at first by the communists), out-argued by Felix Frankfurter, who presented the case against the government in the Atlantic, deplored even by Walter Lippmann in the World, the government of the Commonwealth of Massachusetts, with the backing of a governor’s advisory committee headed by President Lowell of Harvard, moved inexorably to the final solution. Before and after the execution, bombs exploded in foreign capitals, demonstrators marched on the American embassy, workers rioted. Dos Passos, Edna St. Vincent Millay, and other writers were jailed for demonstrating in Boston.
So the American conservative establishment, even at its most manifestly callous, appeared as complacent in ideology and as effective in action as it was secure against attacks from the left. Dos Passos wrote:
“they are stronger they are rich they hire and fire the politicians the newspapereditors the old judges the small men with reputations the collegepresidents the wardheelers (listen…. America will not forget her betrayers)….
all right we are two nations”
CHAPTER l6
The Vacant Workshop
LATE IN THE 1920S, as the Soviets’ first Five-Year Plan was getting under way, Russian fourteen-year-olds were given a school text called New Russia’s Primer. While the little volume focused on the glories of the plan, its author, a young Soviet engineer named M. Ilin, had America very much on his mind. “America has many large factories, many more than we have,” he wrote. There factories turned out four automobiles a minute; there a million tractors worked in the fields.
“The Americans are proud of their machines, of their factories. But how do these factories work? According to some general plan, do you suppose? No, they work without a general plan.” And, with clever illustrations, the author offered the parable of Mr. Fox, the capitalist.
“Mr. Fox acquires money—one million dollars. But money must not remain idle.” Mr. Fox consulted newspapers, friends, agents. “At last a business is found. Hats! That is what one should make. Hats sell; men get rich.” Mr. Fox promptly builds a hat factory.
“The same idea occurs at the same time to Mr. Box, and Mr. Crox, and Mr. Nox. And they all begin to build hat factories simultaneously.” Soon shops are bursting with hats. But the factories continue to work at full speed.
“And here something happens that neither Mr. Fox, nor Mr. Box, nor Mr. Nox, nor Mr. Crox anticipated. The public stops buying hats.” Fox et al. cut prices, slash wages, close their factories. Thousands of workers are idle, new machines grow rusty, factory buildings are sold. Then a year or two passes, the hats wear out, people return to the shops, hat prices go up.
“And now, not Mr. Fox, but a certain Mr. Doodle, thinks of a profitable business”—hats, of course. “The same idea also enters the heads of other wise and business-like people—Mr. Boodle, Mr. Foodle, and Mr. Noodle. And the old story begins over again.
“The experience with hats is repeated with shoes, with sugar, with pig iron, with coal, with kerosene. Factories are blown up like soap bubbles and burst. One would think people had lost their minds.”
This picture of American capitalism, drawn at the height of Soviet euphoria over planning and before sinister aspects of Soviet leadership became evident, was not wholly a caricature of the American economy in the 1920s. The Florida land boom was not all that different from Comrade Ilin’s hat story. In the early twenties the scrublands and everglades of the “Friendly State” lay open for draining and development, thanks to better roads and railroads, a benevolent climate, and the testimonials of William Jennings Bryan, who made his home there, the Ringling circus brothers, Roger W. Babson, the stock market forecaster, and a host of promoters, speculators, and developers. Inflamed by get-rich-quick stories pouring out of Florida, thousands of the gullible bought “prime beachfront property” in towns with such beguiling names as Boca Raton, Coral Gables, Hollywood-by-the-Sea. Never mind that they bought options from a blueprint and did not trouble to look at their land, which might be part of a pestiferous swamp or at the bottom of a lake.
The speculative fever and the enticing stories fed on each other. There were tales—some even true—about the poor woman who had bought a piece of land near Miami in 1896 for $25 and sold it in 1925 for $150,000, about the New York lawyer who turned down $240,000 for a strip along Palm Beach, finally accepted $800,000 in 1923, only to see the strip broken into building lots and sold for a total of $1.5 million, with the value rising later by another $2 million or so at the height of the boom.
Then, in a single day, the bubble burst. A hurricane ripped through southern Florida, smashing buildings, killing several hundred persons, shredding the illusions of the survivors. Even without the storm, the land boom would soon have collapsed. It had been a pyramid game, with each speculator buying not property but a promise, a piece of paper, with which to entice another buyer. Nine buyers out of ten, it was estimated, purchased their options with only one purpose—to resell.
Some of the get-rich-quick schemes were bogus from the start. Charles Ponzi of Boston, a, convicted felon, gulled people into giving him more than $15 million on the claim that he could make vast profits through deft manipulation of foreign exchange rates. In fact, he used the money of later investors to pay off the earlier ones—a classic pyramid scheme. Ponzi seems to have deluded even himself. When he was finally arrested for mail fraud, it was discovered that he had stolen very little for himself; most of the millions he netted had quite unintentionally trickled through his fingers to the investors in his “business.”
Speculative fever spread across the nation in the late twenties and peaked in the “Great Bull Market.” The myth developed that farmers and window washers and maids entered the market in droves, but they did this more as spectators than participants. The number of actual players was probably less than 1 percent of a population of 120 million; as in the past, speculation remained almost exclusively the preserve of the financial elite. But there was an ominous change in who among the elite were playing. Relatively few industrialists and businessmen had participated in past booms, but now much of the money pouring into the stock market came from the capital reserves of manufacturing corporations. With returns from stock speculation exceeding 12 percent through 1928 and early 1929, how could a corporation head resist such alluring profits? When General Motors bought out the plants of the seven Fisher brothers, the automotive pioneers transferred their fortune to Wall Street and became full-time speculators. This industrial money might otherwise have gone into dividends, wage hikes, or capital improvement.
Indeed, the economic leadership of the country seemed to sponsor a market surge that in earlier days would have been discouraged by the likes of Andrew Mellon. Even the former high priests of fiscal conservatism, the directors of the House of Morgan, formed their own investment trust as stock prices skyrocketed. Columnist Arthur Brisbane, himself heavily involved in speculation, wrote glowing accounts of stock prospects for the Hearst chain. President Coolidge opined that Wall Street was “absolutely sound” and that stocks remained “cheap at current prices.” The Democrats chose the market operator John J. Raskob as their National Committee chairman.
The bull market pounded through 1928 and thundered into 1929. Trading on the New York Stock Exchange rose from 3.8 million shares a day to more than 6.6 million during 1928. Brokers’ loans—a measure of the activity of persons buying stock “on margin,” putting up only part of the purchase price—grew from around a billion dollars in the early 1920s to $5.7 billion in 1928, even as interest rates on them doubled. Few found it worth remarking that brokers’ loans had reached a total larger than the amount of actual currency circulating in the country. Herbert Hoover, who had entered the White House with vague intentions of trying to curb the boom, quietly abandoned his effort in the face of opposition from banking and business leaders.
In the summer of 1929, the speculative fever turned into a frenzy. Every market indicator shot up to unprecedented heights. Time and again the ticker in the New York Exchange fell an hour or more behind. Then, at the beginning of September, the upward surge suddenly halted. It was mysterious; there seemed to be no reason. For more than a month prices hovered shakily, as speculators debated whether to cut and run, or to wait in the hope that the boom would pick up again. Slowly, in the Wall Street psychology that had replaced economics and politics, the market edged downward as one investor after another sold out.
Life in the Depression
The stock market debacle of fall 1929 came not in one dramatic crash but in a series of sickening collapses and cruelly delusive rallies. The stock market broke early in September, recovered strongly, then weakened erratically over the next weeks. This period of uncertainty ended with sudden panic on Thursday, October 24—”Black Thursday.” Almost 13 million shares passed over the Wall Street counter that day, often at fractions of their previous prices. The forces building up the market earlier in the decade now went into reverse, destroying stock values at a geometric rate. The need to meet margin calls forced more and more speculators to sell at a loss, which fed the rising panic.
At noon of that day, word spread that Charles E. Mitchell, Thomas W. Lamont, and several other banking czars were meeting at the 23 Wall Street offices of J. P. Morgan and Company. This was immensely reassuring, for the elder Morgan, who had died in 1913, was reputed to have averted the panic of 1907. His son was in Europe, but Lamont was Morgan’s senior partner. There “has been a little distress selling on the Stock Exchange,” Lamont told reporters, “due to a technical condition of the market.” Prices already were firming. Then Richard Whitney—not present at the Lamont meeting—strode confidently onto the Exchange floor and moved conspicuously from post to post, buying shares. Brokers breathed easier. A sharp recovery followed.
Would the big bankers’ dam ho
ld? Prices steadied during Friday and the short Saturday session, but plunged again on Monday. Once again the bankers met, but now their mood had changed. In the face of the panic to sell, the bankers now wished to protect themselves. No optimistic statements came out of the meeting; no Whitney appeared jauntily on the Exchange floor. There was an ominous silence.
On Tuesday, October 29, the hurricane struck. It was, John Kenneth Galbraith would write, “the most devastating day in the history of the New York stock market, and it may have been the most devastating day in the history of markets. It combined all of the bad features of all of the bad days before.” Under a four-column headline next day, the New York Times summed up the crisis in its lead story: “From every point of view, in the extent of losses sustained, in total turnover, in the number of speculators wiped out, the day was the most disastrous in Wall Street’s history. Hysteria swept the country....”
“The fundamental business of the country, that is production and distribution of commodities, is on a sound and prosperous basis,” said President Hoover during these October days. His statement was intended mainly to reassure investors, but Hoover’s emphasis on production reflected his own economic philosophy. As a “practitioner of industrial rationalization” and a prophet of enlightened industrialism, he had seen the strength of the nation in its vast and efficient manufacturing capacity, and its economic weakness in unbridled speculation. Now he was presiding over an economy in which reckless investors—stock purchasers and sellers—appeared to be dragging industry into the chasm with them.
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