Rising Tide

by John M. Barry

  The motto of Rex is Pro bono publico—“For the good of the public.” The motto of Comus is Sic volo, sic iubeo—“As I wish, thus I command.”

  John Parker was Comus. Every Rex since 1888 has belonged to the Boston Club.

  AS EXCLUSIVE as the Carnival balls were, membership in the clubs of New Orleans marked the real insiders, for the krewes had a larger membership than the clubs. The city’s first club was formed in 1832, four years before New York’s Union Club. In 1842 the Boston Club, named after a card game, was founded, and several men, including Louisiana Senators John Slidell and Judah P. Benjamin, subsequently a Confederate cabinet officer and then adviser to Queen Victoria, belonged to both the Boston and Union Clubs. Then came the Pickwick Club and the Louisiana Club. All were exclusive, but the Louisiana Club has been called the most exclusive club in the country; only members were allowed within its walls. In 1905, President Teddy Roosevelt visited New Orleans during a yellow fever epidemic. It was an act of heroism that won the city’s heart—in the preceding century, the disease had killed 175,000 people in Louisiana alone—and the Louisiana Club gave a luncheon in his honor. But before even the president, himself from one of the nation’s grandest families, could enter the club, he had first to be made an honorary member. The club president at the time was Edward Douglass White, then a justice and later chief justice of the U.S. Supreme Court.

  From the beginning the clubs mixed power and society. In 1874 an organized army of Confederate veterans, including White, defeated the largely black city police force in a pitched battle and overthrew the Reconstruction government. (Federal troops later restored it to power.) Of the Pickwick Club’s 161 members, 116 fought in the battle, and the plans for the uprising “were largely formulated under the roof, within the walls, and by members of the Boston Club, screened from the public eye by the sanctity of the club walls,” according to the New Orleans Times-Democrat, which added, “The Boston Club [is] composed of gentlemen who know what’s what…and stands today, as it has always stood, at the forefront of the social system of New Orleans.”

  Half a century later the only thing that had changed was the role of the Jews. The first Rex, in 1872, was Jewish. Jews belonged to the Country Club and the Southern Yacht Club, the second oldest in the country. The most socially prominent law firms and banks had Jewish partners and board members, and Jews and gentiles socialized.

  Yet Jews occupied a complex never-never land in New Orleans society. By the 1920s the clubs and Carnival excluded Jews, except for a few token members of Rex (but Jews were never in the royal court). The exclusion was gradual, beginning in the late 1800s and early 1900s as immigrants from eastern and southern Europe, including Hasidic Jews, seemed to threaten the nation’s ethnic and racial identity. New Orleans, despite its Catholic heritage, showed a violent bias against Italian immigrants. Immigrant Jews were far more foreign; even native New Orleans Jews discriminated against them. Immigrant Sam Zemurray became president of the United Fruit Company and built one of the greatest mansions on St. Charles Avenue but was never accepted into the elite all-Jewish Harmony Club because, says the daughter of one of the city’s oldest and wealthiest Jewish families, “he spoke with an accent.”

  Carnival snubbed even elite Jews. One prominent Jewish woman recalls, “Mother used to get invitations to all the balls but it just stopped.” The exclusion was punctuated with an insult. Rex stopped along his parade route for a toast at suitably important places. These stops had always included the Harmony Club. But one year, probably 1913 or 1914, with a crowd of Harmony members waiting in the street and a waiter holding a tray of glasses, Rex went right on by. The Jews would never wait for him again, and Rex would never stop again. Later, Baron de Rothschild was in New Orleans during Carnival, and society ladies prostrated themselves before him. While he was Jewish, he had been received in all the real courts of Europe. In New Orleans he was invited neither to any club nor to any ball of Carnival royalty. Jews continued as partners and intimate friends with men who were Rex and Comus and president of the Boston Club. But a line had been drawn. Jewish members of the elite resented it bitterly, although to avoid embarrassment on both sides they routinely vacationed outside the city during Carnival.

  Jews had been among the Boston Club’s founders—Judah Benjamin was Jewish—and one served as club vice president as late as 1904. But by the 1920s the Boston Club had no Jewish members (nor did it in 1996). One Boston Club member bragged of his club’s “spirit of noblesse oblige.” But he also spoke of a harder racial edge: “Your club man must have a sense of the fitness of things. A club in its membership must follow Darwin’s law of natural selection. In club life as in all other activities only the fittest survive.”

  In 1927 every bank president in the city but one—believed to be a Jew, although he denied it—belonged to the Boston Club. Charles Fenner, whose investment firm later merged into Merrill, Lynch, Pierce, Fenner, and Smith, was a club past president. John Parker belonged. So did LeRoy Percy; whenever he came to New Orleans, a limousine picked him up and took him to the club, where he played poker. (Gentlemen all, no one even kept careful track of money. After one game Percy sent a check of several thousand dollars to cover his losses, noting, “The aggregated amount may be three [hundred] out of line on either side, but any way, this will do to go on account.” Another time the club manager wrote Percy to ask what he had won because “there is a discrepancy in the sheet”; the club had several hundred dollars too much and the manager was trying to find to whom it belonged.) The club men had power.

  But these men were not like Percy. His vision extended deeper and wider than theirs. Unlike Percy, these rulers of New Orleans did not initiate or create, did not grow or make or build things. Bankers and lawyers, they judged what other men grew or made or built. Their power was over money itself, and whether to give it to those who produced or created. It had always been that way. From the city’s earliest days New Orleans had close ties to the money centers of New York, Boston, Philadelphia, London, Paris. English bankers began living full-time in New Orleans in the early 1800s.

  As a result, before the Civil War, on a per capita basis New Orleans was the wealthiest city in America. In the 1920s it remained—by far—the wealthiest city in the South. Its Cotton Exchange was one of the three most important in the world. Its port was second only to New York. Its banks were the largest and most important in the South. According to a Federal Reserve study, New Orleans had nearly twice the economic activity of Dallas, the South’s second-wealthiest city, and between double and triple that of Houston, Atlanta, Memphis, Louisville, Richmond, or Birmingham.

  The city’s power over money also meant its power extended far outside the city itself. Percy recognized this himself when he, Parker, and several others organized the Staple Cotton Cooperative Association to control prices by limiting production. In 1926, Percy urged several New Orleans bank presidents and financiers, all but one of whom were members of the Boston Club, to force “a compulsory reduction in acreage” by refusing to lend money to planters who exceeded their crop allotments. “[S]uch an agreement made among the bankers would at once be accepted as effective and immediate relief would follow.”

  A few other organizations, such as the Board of Trustees of Tulane University, indicated even closer proximity to the inside of New Orleans than did club membership. But the most interior institution in this city of insiders wielded the power of the establishment in a way unique in the United States, and probably the world. This organization was serious, not social, and did include an occasional Jew. It controlled New Orleans in the way that really counted: it controlled the money.

  THE BOARD OF LIQUIDATION of the City Debt was initially created to handle the huge debt left over from Reconstruction. Mississippi, led by LeRoy’s father William Alexander Percy, had, similarly, created the Liquidating Levee Board, which built no levees but did eliminate old levee bonds by paying only pennies on the dollar, and then was abolished. But New Orleans, which produced f
ew goods and grew no crops, had to retain the confidence of investors in New York, Boston, and London; the city had to pay off its bonds in full. So New Orleans bankers in 1880 created the Board of Liquidation and gave it extraordinary powers. (It operates today with many of those powers.)

  First, every day the city deposited all the money it collected in taxes in the board’s bank accounts. The board paid off whatever notes and interest were due, then gave any money left over to the city government. In the 1920s, payments on bonds absorbed between 39 and 45 percent of all city taxes, leaving little for the city to spend on anything else.

  Second, the city could issue no bonds—not for schools, not for roads, not for lighting—without the board’s consent.

  But the most extraordinary aspect of the board was its composition. It had nine members: the mayor and two councilmen served ex officio, while six “syndicate” members, who made all real decisions, served for life. And the board was “self-perpetuating.” When a syndicate member died or resigned, surviving syndicate members picked a successor.

  Though the mayor, the governor, and the voters had no say over who became a syndicate member, the syndicate members dictated decisions about nearly all large public expenditures. Elected officials controlled only current operating budgets. The syndicate members answered to no one but themselves—and their colleagues in the clubs.

  Between 1908 and 1971 only twenty-seven men served as syndicate members; virtually all were either bankers or bank directors. Twenty-four of the twenty-seven belonged to at least one of the exclusive clubs; most belonged to several. At least two of the other three, probably all three, were Jewish.

  In the 1920s three men in particular had strong voices on the Board of Liquidation. One was James Pierce Butler, Jr., a towering gangly man who headed the Canal Bank, the largest bank in the South and the only southern bank listed among the world’s largest; it also had intimate ties with the Chase in New York. Butler was a president of the Boston Club. A second man was Rudolph Hecht, president of the Hibernia Bank, who had a reputation for brilliance and arrogance; in 1921 he had received the Times-Picayune Loving Cup, given annually by the paper to the citizen who had contributed most to the city in the preceding year, for his work as president of the Dock Board. Later he became president of the American Bankers Association. The third man, J. Blanc Monroe, was an unyielding litigator who dominated the board of the Whitney Bank; he combined social connections with real abilities to become the city’s most powerful lawyer. LeRoy Percy knew all three well, both through clubs and business.

  In 1927, Butler sat snugly at the center of the New Orleans world of money, society, and power. His position was signified by the treatment given him by the Mystic Club, a Mardi Gras organization called “ultra-exclusive…[with] a reputation among fastidious people for presenting the most elaborate and most successful costumed entertainments of America.” That year the club put on a Mardi Gras ball whose theme came from a movie starring Rudolph Valentino and Doris Kenyon. Booth Tarkington, who wrote the movie, also wrote the pageant for the ball; the same jewels worn in the film by Valentino and Kenyon adorned Mystic’s king and queen. The queen’s gown was said to cost $15,000, double the $7,500 annual salary of the governor of Louisiana. The Times-Picayune, the paper that was run by and served as the voice of money and society and authority, ran photographs of all but the Mystic Club’s queen on its society pages; the photograph of the Mystic Club queen appeared on page 1. She was Mrs. James Pierce Butler, Jr.

  CHAPTER EIGHTEEN

  AFTER THE 1922 FLOOD the chief of the Army Corps of Engineers had advised the New Orleans financial community that, if the river ever seriously threatened the city, they should blow a hole in the levee. In the years since, those words had never left the consciousness of either the people in St. Bernard and Plaquemines Parishes, who would be sacrificed, or those who dealt with the river in New Orleans. Both groups had been monitoring the river closely all year. As early as New Year’s Day the St. Bernard Voice had warned, “Flood Water Is Coming Down!” And in late January, hydraulics engineer James Kemper wrote a report on the river situation for newspaper publisher James Thomson.

  No layman in New Orleans spent more time on river policy than Thomson. Five years earlier he had organized the Safe River Committee, and ever since he had been pushing hard in Washington to change the policy toward the Mississippi. It seemed, however, he had adopted the river issue at least partly to make himself a larger figure in New Orleans, to push himself into the inner sanctums.

  Thomson was not a member of the club and wondered why. An ancestor had tutored John Marshall, and he had run a paper in Norfolk, Virginia, then bought the New Orleans Item and moved to the city in 1907. He started a second paper in New Orleans, the Morning Tribune, and became a director of a midsized bank, while in Washington he remained a confidant of senators as well as his father-in-law, Speaker of the House Champ Clark. But none of that was good enough for New Orleans. Perhaps he was kept in New Orleans’ outer reaches because he lacked appropriate style. Tall, with a disproportionately large head, he liked to be called “Colonel” despite his lack of military experience. In hot weather he often stripped off his shirt in his office, treating those who worked for him to the sight of his pale white skin and soft body. Or perhaps he was excluded because he had criticized the Board of Liquidation for allowing banks with whom it deposited millions of dollars of the city’s tax receipts to pay no interest to the city (after a lengthy campaign, banks finally did begin paying interest), and for favoring certain banks—the Canal, the Whitney, and the Hibernia—with these deposits.

  Whatever the reason, his exclusion bothered him. His only child had died. His place in the city mattered. Charles “Pie” Dufour, a Boston Club member and writer who worked for him, said: “Thomson was an ambitious man, always seeking acceptance from the establishment and never quite getting it. He moved in the establishment but always tentatively…. He was on a tightrope, a treadmill.”

  His river campaign allowed him to insinuate himself into the establishment. Once he had brought Butler, Hecht, and Lonnie Pool, the president of the Marine Bank & Trust Company who ruled Carnival as Rex in 1925, to Washington to see President Harding. Harding had listened to a presentation by Kemper and had promised action, but died before he could keep his promise.

  Still, when a dinner was given celebrating the twentieth anniversary of Thomson’s ownership of the Item, the governor, the Louisiana congressional delegation, present and former mayors, even a senator from Wisconsin attended. Blanc Monroe and Jim Butler did not. Nor did a single person associated with the Times-Picayune. It was a snub from the social elite, a snub that only made Thomson more determined to penetrate into the city’s decision-making. His knowledge of the river was his battering ram. For the report Kemper gave him in January 1927 was not good news.

  The weakest levees in the state lay just thirty miles upriver, Kemper said, outside the jurisdiction of the Orleans Levee Board. A crevasse there could send water pouring into the city from the rear as had happened in 1849, the last time a serious river flood hit the city. New Orleans had a rear protection levee but “it offers protection in name only,” Kemper warned. As for the city levees themselves, the river had already begun to strain them. At a ferry landing uptown a hole in the levee had developed and needed immediate attention, while four and a half miles of city docks fell below the Mississippi River Commission’s grade for height. But the biggest problem was the new Industrial Canal, built to connect the river and Lake Pontchartrain. The height of its locks, Kemper said, “was based on a miscalculation in slope. The Mississippi River Commission and the Dock Board have concluded there is a four foot drop over the 10 miles between Carrollton and the canal. It is no more than one foot, eight inches. A flood equal to that of 1922 will overtop the locks by four feet.”

  The turbulence this would generate could rip the locks, and the levee there, apart. They required immediate attention.

  Kemper also explained that, parado
xically, a great flood would not threaten the city because it was certain to overwhelm levees upriver. The river would then spread over the land, lower the flood height at New Orleans, and eliminate any danger for the city, although it would devastate the rest of the lower Mississippi valley. Kemper’s chief concern, in terms of New Orleans, was actually a lesser flood, one higher than 1922 but not so high as to breach levees above the city.

  Thomson had made Kemper his personal engineering expert and put his newspaper’s weight behind him in many fights, but he chose to reject Kemper’s insistence that a great flood would not threaten New Orleans. The rejection would have vast impact. Meanwhile, he informed members of the Safe River Committee of Kemper’s opinion on the narrower question of the city’s levees.

  Soon after Mardi Gras a Dock Board engineering report also warned of trouble: “The levee between Canal Street and Esplanade Avenue is not up to Mississippi River Commission grade and section.” Those blocks included the entire French Quarter. It added, “Serious settlements have taken place [here]…. Mistakes at this time would have far-reaching consequences.”

  By mid-March the public was paying close attention to the river. People needed no report; they simply climbed the levee and looked. The river was high and angry. Hundreds of men were working on the levees, and hundreds more were being hired. Railroads were putting their own crews to work on the levees as well. In one area railroad crews built an emergency bulkhead; within weeks waters washed part of it out. It was repaired, sacked, and additional revetment added.

  In late March, John Klorer, the city councilman and former river engineer, personally inspected the levees, walking their entire length on both banks for the third time in four weeks. Though an elected official, he gave his report to Thomson, not to the mayor or the council. He cited “decided improvement” overall, but noted that 7,000 feet of the levee line still fell short of safe margins and “should be taken in hand promptly.”