The Family

by Kitty Kelley

  As for his own romantic relationships, Prescott might have been briefly engaged at Yale, if a vague recollection can be trusted, but the secondhand remembrance is scant and the details scarce.

  “Years ago my first husband’s great-aunt Marian Walsh Pierce told me she had once been engaged to Prescott Bush,” said Peggy Adler, a newspaper researcher. “During the 1960s, we both subscribed to the New Haven Symphony, and we’d go to the New Haven Lawn Club for dinner beforehand. One night she mentioned that she had been engaged to Prescott Bush, but the name meant nothing to me at the time. She said she broke the engagement to marry Clarence ‘Doc’ Pierce [Yale 1909].

  “Marian’s brother was Richard J. Walsh, president of the John Day Publishing Company. He founded the company to publish his second wife, Pearl Buck, the American novelist who won the Nobel Prize for Literature in 1938. His first wife’s name was Ruby. A New York tabloid headline on his divorce was: ‘Publisher Swaps Gems.’ Funny to think about how different the world might have been if Aunt Marian hadn’t changed her mind and decided to marry Prescott Bush.”

  Prescott proposed to Dorothy in the summer of 1920, and George Herbert Walker accepted for his daughter. By then Bert had moved his family to New York City to go into business with W. Averell Harriman. Dorothy had joined the Junior League there but didn’t consider New York City home. She said she didn’t want to be married in Manhattan or St. Louis. Instead, she decided her wedding could only be at the place she had been born and loved the most—Kennebunkport, Maine. So she and her mother began planning for the following August. The ceremoney was to be held in St. Ann’s Episcopal Church and the reception at Surf Ledge, the Walkers’ summer home atop the rugged cliffs of the Atlantic Ocean.

  Dorothy’s seven bridesmaids, including her sister, Nancy, as maid of honor (“First Maid again, eh?”), came from the Social Register world, as did most of Prescott’s ten groomsmen, six of whom were Skull and Bones men, including his brother, Jim. Dotty tried to match the wedding party by height so that Isabel Rockefeller would not tower over Henry Sage Fenimore Cooper, and Prescott, at six feet four, wouldn’t look like Mr. Snow White surrounded by seven dwarfs.

  Loulie Wear Walker did most of the work on her daughter’s wedding and was properly saluted by the New York Journal American, which described the affair as “brilliant and as perfect in details as the good taste of Mrs. G. Herbert Walker could make it.”

  Dorothy ecstatically told friends that she had found her prince and was looking forward to a life of happily-ever-after. She was not to be disappointed. As she wrote in a tribute many years later for Prescott’s funeral, “When he stood at the altar 51 years ago and promised to ‘Keep thee only unto her as long as you both shall live,’ he was making a pledge to God that he never for one moment forgot, and gave his wife the most joyous life that any woman could experience.”

  Things could not have been happier for the young couple during their engagement. But tragedy soon interrupted their bliss. The phone rang on Saturday evening, September 4, 1920, and Prescott learned that his sparkling forty-eight-year-old mother had been tragically killed. Flora and her husband of twenty-six years were at Watch Hill, Rhode Island, with their youngest child, Jim, who was looking forward to soon being his brother’s best man. Flora and Sam were belatedly celebrating their twenty-sixth wedding anniversary at Ocean House, where they had been, according to the society pages, “prominent guests for a number of summers.” They had decided to take a walk along Watch Hill Road in the late afternoon. Friends passed them in a car and backed up to talk by the side of the road. Another car coming down the hill swerved quickly to avoid an accident. At that very moment, Samuel Bush left his position beside his friend’s car and was followed by Flora. The driver coming down the hill slammed on his brakes but could not stop in time. Flora was killed instantly.

  In her letters to her husband during the summer of 1908, Flora’s reflections on the fragility of life coupled with her enthusiasm for the automobile read poignantly next to the newspaper reports of her terrible death.

  The Bushes gathered sadly in Columbus, Ohio, to bury Flora a few days after the accident. They felt star-crossed by funerals and had been gathering too frequently in the last two years to bury loved ones—first Flora’s father, then her sister, and now, heartbreakingly, Flora herself.

  The following summer, on August 6, 1921, the Bushes and the Walkers all gathered in Kennebunkport for the wedding everyone had looked forward to with such joyous anticipation. The bride was beautiful, the groom handsome, and, despite Prohibition, the champagne flowed. Samuel Bush, looking more pensive than usual, felt lonely without his ebullient wife by his side. How happy Flora would have been to see their “splendid boy” marry into high society. Prescott was now well and truly poised to take the family name into history.

  CHAPTER THREE

  A down-at-the-heels banker in a po’boy cap stands on the sidewalk in the middle of morning rush hour and tries to hawk apples. A distinguished man in a black bowler strolls by and waves his walking stick.

  “Well, so long,” says the apple seller. “I’ll see you at lunch at the Bankers Club.”

  The trenchant New Yorker cartoon captured the financial tumult of the late 1920s as the country started its slide into the Great Depression. Flappers, gangsters, and bootleggers also marked the decade, along with lynching parties and the rise of the Ku Klux Klan. With the war over, America had been celebrating, but after the crash millions had fallen into unemployment. Firms making consumer goods were forced to cut back on production because consumers stopped buying. Children danced the Charleston for pennies in front of theaters at intermission; and coal miners formed unions and went on strike. Those with industrial jobs, particularly railroad employees and clothing workers, experienced drastic wage cuts. The popularity of catalog shopping and paying on layaway had pushed the economy to its limit. So had margin buying in the stock market. During the heyday of the Jazz Age, better known as the Roaring Twenties, stock-trading records skyrocketed as Americans of modest means began speculating and buying stocks. But instead of buying with actual money, they purchased stocks with a little cash down (10 percent) and a lot of credit (90 percent). They then used the stock they’d bought as collateral for loans to buy even more stock. Bewitched by the fantasy of becoming millionaires, they gambled dangerously under the delusion that they were investing. The speculation bubble finally burst on Black Tuesday, October 29, 1929, when the stock market crashed.

  During the decade preceding the crash, Prescott Bush was not much more than a traveling salesman who clung to various jobs. These jobs moved him and his young wife from St. Louis to Kingsport, Tennessee, back to St. Louis, and then to Columbus, Ohio, to work for his father for several months. Summers were spent in Kennebunkport, where Prescott and Dotty’s first child, Prescott Sheldon Bush Jr., was born in 1922. When the venture with his father failed, Prescott took a job with Stedman Products near Milton, Massachusetts, where his second son, George Herbert Walker Bush, was born in 1924.

  Now that Bert Walker, or “Pop,” as Dorothy called her father, had a grandson named in his honor—he was immediately tagged “Little Pop” or “Poppy”—things started looking up for the Bushes, either by coincidence or by design. Prescott landed a job “to promote sales” with the U.S. Rubber Company in New York City, and in 1925 the family moved to the wealthy little town of Greenwich, Connecticut (population thirty thousand), where they bought their first home at 11 Stanwich Road. Whether the $14,000 ($148,560 in 2004) house was purchased by Dorothy or merely put in her name is unknown, but Prescott was not making much money at the time.

  Dorothy was pregnant with their third child, Nancy, who was born in 1926. Bert built his daughter a one-story house on his property at Kennebunkport so that she and the children could spend every summer in Maine while Prescott was working in the city. Bert also paid for a live-in couple to cook and garden, a nurse to take care of the children and give Dotty massages, and an Irish maid named Lizzie Larkin t
o do the cleaning.

  While much of the country was financially wobbly, Bert Walker was flying high. He cabled his partner, Averell Harriman, who was in London playing polo with the Prince of Wales:

  We closed for the horses, and payment was made last Wednesday in the sum of $225,000 [$2,092,378.65 in 2004]. At the last moment the Belmonts stated that the stable was not included and that they had a chance to sell it elsewhere; but I insisted that it was your understanding and mine that it was in, and they finally ceded the point.

  Although he had inherited $9,842.59 ($92,000 in 2004) from his mother’s estate, Prescott would recall the same period as being financially taxing for himself and his young wife. “I know what it is to tramp the streets all day and return to a strange hotel room in a strange city tired and discouraged,” he said years later. “Mrs. Bush and I know what it is to be deeply in debt and to feel that we could never get out from under. Indeed we have had some pretty difficult years together before the tide turned and we gradually paid off our debts and began to save for the security of our growing family.”

  Prescott continued selling rubber-tile flooring for another two years until his father-in-law pulled the golden cord that transformed an itinerant salesman into an investment banker. Prescott never forgot the day.

  “I do remember that I left U.S. Rubber on May 1, 1926, to become associated with W. A. Harriman and Co., which was an investment banking organization, principally owned by Averell Harriman and his brother, Roland,” he said in an oral history. “Mrs. Bush’s father, G. H. Walker, was the president of it, but Averell was the chairman, and my father-in-law had a substantial interest in it.”

  Lest the interviewer assume that this professional elevation to vice president of W. A. Harriman and Company was merely a matter of the son-in-law also rises, Prescott emphasized his friendship with Roland “Bunny” Harriman (Yale 1917; Skull and Bones) while acknowledging the confidence his father-in-law had in him. “We [Averell and Roland Harriman and G. H. Walker] talked it over and they seemed to think that I would have some possibilities in that field that they were looking for . . . At any rate, they offered me a job.”

  Going from selling rubber flooring to representing the prestigious name of Harriman on Wall Street energized Prescott, who was thirty-one years old when he started his new job. He joined the Round Hill Country Club in Greenwich and began playing golf with his father-in-law, who drew him into the U.S. Golf Association, of which Bert was then president. Prescott would follow in those footsteps, serving on the executive committee for eight years before he, too, became president.

  In 1926, W. A. Harriman and Company was a brokerage firm that concentrated on foreign stocks and bonds. Through its offices in Berlin, Germany, opened in 1922, it became one of the first American investment houses to assist in rebuilding European industry after the war. As an incorporated underwriting organization, the company was prohibited from doing any type of banking. So when the Harrimans decided they wanted to start a private bank for high-net-worth clients, they turned to Roland’s classmate and close friend Knight Woolley (Yale 1917; Skull and Bones), who had been a groomsman in Prescott’s wedding and was godfather to his son George Herbert Walker Bush. In 1927, Woolley became general manager of the private bank known as Harriman Brothers and Company.

  The two companies—W. A. Harriman and Company and Harriman Brothers and Company—made their offices in one room at 39 Broadway after the Harrimans’ accountant bought six rolltop desks from a secondhand-furniture dealer. “By any standards,” recalled Knight Woolley, “it was all pretty crummy.”

  Within a few months, ferocious “powwows” began as the two groups discussed general policy. “Roland and Averell were for doing a cash business only and having no margin accounts,” Woolley wrote in his memoir. “The dissenter was Bert Walker. His firm in St. Louis took margin accounts. In fact, such accounts were probably the backbone of their business.”

  Woolley did not know too much about the problem of margin accounts then, but he objected on the purely snobbish grounds of NOCD, code for “Not Our Class, Dear.”

  “At that time, Ira Haupt & Co. occupied most of a floor at 39 Broadway, the Harriman Building,” Woolley wrote in a privately published memoir for his family. “On active days their customers crowded the lobby, and even the fire stairs, where they sometimes ate picnic lunches. The men’s toilets were completely fouled up. They were a terrible bunch of people. If they represented typical margin account clients, I was against margin accounts.”

  It didn’t take long for Woolley to learn that lending money to individuals for the purpose of purchasing and carrying securities was unwise and financially hazardous. That’s when he butted heads with Bert, the financial buccaneer.

  “One day Walker asked me to come to his office,” Woolley recalled. “He was seated at his enormous flattop desk with my month-end balance sheet before him. He was jotting down some figures on a small pad as he looked up and said: ‘We have a big underwriting coming along at the end of next week. I would like to clean up some of our current loans now, so we will be out of the banks for a period of about a week. I want you to liquidate at once your treasury bills, call loans and acceptances and turn the money over to us. We’ll give you an I.O.U. note. I figure that your quick assets will just about do it. Later on, we’ll return these funds to you.’”

  Woolley immediately saw the proposition as a “dangerous dealing.” He tried to keep calm and speak slowly. “I explained our obligations to our depositors and to the Federal Reserve Bank. They had our figures on file and were ready buyers of our commercial acceptances. Private banks, such as ours, in those days did not publish balance sheets, but depositors had every right to believe we handled our affairs, as did the public banks. I ended by saying to Mr. Walker that I was sorry, but that I would not do what he had ordered.”

  Within seconds the two men abandoned all pretense of composure. Walker, who brooked no insolence from subordinates, was red-faced and grew livid when Woolley started shouting at him. At that moment Averell Harriman walked into the room.

  “Without waiting for Walker to speak, I turned to Averell and hastily outlined Walker’s demand for all of Harriman Brothers’ quick assets. I also reminded him of our obligations to the New York Fed as well as to our depositors . . . I concluded by saying that if Walker had his way, I intended to resign forthwith.”

  Harriman quickly seized control. “Knight, why don’t you leave us now,” he said. “I want to have a chat with Bert about this. You will hear from us later on.”

  Neither Harriman nor Walker ever said anything further to Woolley about the matter. “Rumor had it that a pretty vehement argument ensued,” Woolley said. “Rumor also had it that they had had a series of prior disagreements. As Pres Bush . . . informed me later, it all led up to Bert’s decision to retire some nine months later.” The matter irrevocably settled itself—proving Woolley’s fears to be correct—when margin buyers and sellers panicked, causing the stock-market crash. Over the next few months, more than a thousand banks failed. Farm prices fell, factories closed, soup kitchens opened, and breadlines formed. When people started jumping out of windows on Wall Street rather than face financial ruin, Bert Walker was comfortably ensconced at Walker’s Point in Kennebunkport, nursing a bad stomach. But even he was reassessing.

  Five and a half weeks after the crash he wrote a “Dear Averell” letter dated December 6, 1929:

  As I stated to you last spring I am willing to step out of the picture if doing so will best suit your book. You were good enough at that time to say an emphatic no and if that view still holds I propose that we continue as we are for another year, making certain organization changes as discussed and assigning to you such organization work as you may wish to take on . . . I should like to have Pres made an assistant to the president to handle details under my direction.

  The arguments over Bert’s margin buys, plus his ill health—he alluded to intestinal pain in his letters—led to his decision to resign a
s president of W. A. Harriman and Company. Within five months he began extricating himself from almost all the Harriman companies, except the Harriman Fifteen Corporation, the holding company Averell had created to handle his personal investments in shipping and mining. By May 1930 Bert Walker had returned to his perch as the ruling presence of G. H. Walker and Company, where he continued buying and selling on margin just as he had done before the crash. Prescott, whose close personal ties to Roland “Bunny” Harriman and Knight Woolley had become even closer, had no interest in leaving with his father-in-law.

  “I heaved a long sigh of relief,” said Woolley, who had won the argument about margin accounts. “The lending of money to individuals for buying and selling securities was forbidden as one of our most important unwritten rules . . . With Walker out of the way, my job was much simpler, safer and far less nerve-wracking.”

  But business did not improve. No one within the Harriman companies had foreseen the stock-market crash, and months later people were still reeling. By the spring of 1930, Averell Harriman had directed Prescott Bush to undertake a complete financial review of all the Harriman companies. Prescott issued a stern report calling for drastic cutbacks: the offices in Warsaw and Paris were to be closed, and the Berlin office was to be put on a budget of no more than eighteen thousand dollars a year. Other severe recommendations were made as well. “Such a retreat was personally offensive,” wrote Harriman’s biographer Rudy Abramson, “but Averell reluctantly agreed to it.”

  The aftershocks of the crash reverberated throughout the world’s financial community, affecting even the biggest investment-banking houses. One of the most venerable, Brown Brothers and Company, sustained such heavy losses that it was forced to seek new capital. The Harrimans, with their inherited wealth of $70 million ($777 million in 2004), were the first approached. Conversations soon went way beyond the matter of a mere loan.