by James Grant
If the WIB failed to do all that it might have done, it wasn’t for a lack of dedication by its last chairman. After the war a story came to light about a mission that the Board had sent to London to deal with Allied governments on the subjects of prices and joint purchasing. A twelve-man WIB team was packed and ready to sail in July 1918 when Baruch received a call from the head of the mission, Leland Summers. It seemed, said Summers, that there was no government money for the trip and little or no chance of getting any. Baruch simply referred him to his secretary, Miss Boyle, who wrote a check. The Summers delegation, once financed and settled in London, wangled lower prices from the British for jute and wool. It worked a trade with Spain for mules in exchange for ammonium sulphate (General Pershing needed the animals to haul artillery), and it planned the collective Allied purchase of nitrates, conferring with Great Britain’s official in charge of that strategic commodity, Winston Churchill. Baruch’s out-of-pocket expenses for the trip amounted to $63,752.25 (for which he refused to be reimbursed); estimated savings to the taxpayers as a result of Summers’s work ran to the millions.
Another facet of Baruch’s wartime service was also divulged. When the WIB was disbanded after the Armistice, its clerical employees, notably several hundred young single women, were cast adrift in Washington. This worried Baruch, and he hired a matron to interview each woman and to impress on her the desirability of returning home instead of (to quote another chivalrous, or, as it later came to seem, reactionary southerner, James F. Byrnes) “walking the streets of Washington seeking employment.” Baruch offered a further inducement for leaving town: a free railroad ticket home (wherever it happened to be), complete with Pullman berth and all expenses paid. The cost of that amounted to $45,000. As the young women climbed aboard the trains, each received a postcard addressed to Baruch with instructions that it was to be mailed when she reached safe harbor. Baruch saved the postcards, and he also saved a loving cup that had been presented to him and inscribed thus:
To Bernard M. Baruch, Chairman of the United States War Industries Board, as a token of confidence and affection, from Members of the organization which, under his leadership, aided in winning the war, Washington, DC, 25th of November, 1918.
Some twenty years later, a visitor to Baruch’s New York home noticed that the only books in his office were the minutes and correspondence of the War Industries Board (and of the subsequent Peace Conference at Versailles), bound in green leather.
31. By the close of the war, the War Industries Board (of which Baruch was then in command) was reduced to exhorting the nation at large to bring down the cost of living. Thus a proclamation dated August 1, 1918:
Whereas the high cost of living is daily increasing, which is causing great hardships on the working man and his family and the public generally; and
Whereas the abnormal prices charged the consumer for common necessities is creating a condition that is arousing a spirit of unrest and dissatisfaction which tends to demoralize the unity, harmony, and confidence of the public; and
Whereas there is grave danger of continued unrest and labor disturbances which greatly interferes with the National War Program; and
Whereas the determining factor in the winning of the war is that public confidence must be firmly established so that the fullest cooperation be obtained and maintained in support of the national policies:
Therefore be it Resolved by the War Industries Board, That we strongly urge that the prices of commodities be fixed at a fair rate to the consumer, and plans for this purpose will be made to carry out at once the aims and purposes of this resolution.
32. An uncomfortable fact for the Administration was the rejection of Du Pont’s prewar proposal to build an atmospheric recovery plant at Muscle Shoals. The man who had called the company’s attention to the strategic significance of American dependence on Chilean nitrates was none other than General Crozier, the Army’s negotiator of the repudiated Du Pont powder contract—another uncomfortable fact.
33. On Christmas Day 1918, Eduard Beneš, the Czech foreign minister, reported to the American ambassador in Paris that 20,000 US military overcoats were apparently on the way, but he inquired as to the whereabouts of 40,000 shirts, 40,000 pair of boots, 30,000 pair of leggings, and 40,000 pair of socks that hadn’t turned up.
Ten
Plainspoken Diplomat
Bernard Baruch, a first-class passenger aboard the SS George Washington, watched with ambivalence as the ship cast off lines in the fading daylight of New Year’s Day 1919. There was the prospect of diplomatic adventure in Paris to contemplate but also the inevitability of a rough winter crossing. Possibly he felt a stab of regret about the mid-level capacity in which he was about to take up new duties. He had been named an adviser to President Wilson in the American delegation to negotiate the peace. Shortly after the Armistice, he had resigned from the War Industries Board, and shortly after that he had refused an invitation to succeed McAdoo as Secretary of the Treasury. He had made the excuses that he was a Jew and a speculator and therefore a potential embarrassment to the Administration. Almost certainly the President had pointed out that the same alleged stigmata had embarrassed nobody when he chaired the WIB, but Baruch persisted, and the Treasury post went to Representative Carter Glass of Virginia.
Also bound to France aboard the George Washington were fifty Army clerks bossed by two officers; two thousand sacks of Army mail; $2 million in gold, also for the Army; Assistant Secretary of the Navy Roosevelt; various Mexican, Chinese, and Latin American peace delegates (accompanied, in the case of Lu Tsiang of China, by wife, family, and servants); and Charles Schwab, the steel titan and wartime shipping official. As the ship steamed out of the harbor and into the gray January swells, Baruch retired to be miserable alone. Hearing that he was under the weather, Schwab dropped in to ask what he thought now about the Wilsonian tenet of the freedom of the seas. Baruch had the strength to reply, one millionaire to another, that Schwab could have all his interest in them.
After the ship reached Brest, Baruch went on to Paris by special train to a life of well-appointed idleness. Expecting to bring his wife and a daughter, but then changing plans, he had booked a three-bedroom suite at the Ritz. (Annie and Belle visited Paris in February and sailed home with a maid named Miss Thompson on March 17; Mary Boyle, Baruch’s secretary, stayed in New York, and it was her name that he jotted down in the inevitable form in the place marked “Notify in Case of Emergency.”) Lacey, his valet, was with him or would soon be sailing, and Baruch himself had let, or was about to engage, a house in the Paris suburb of St.-Cloud for weekend entertaining. In America it was rumored that he was to be the next US ambassador to France, which was untrue, and that he had been appointed to a commission of thirty-six by Governor Al Smith to study postwar problems in the state of New York, which was true. But in Paris no work was assigned. He tried to report to Colonel House, the President’s chief of staff, but (as he wrote): “It was not easy to see the Colonel . . . and for some days I sat around wondering why I had been called to Paris. I had the clear impression that my arrival had not occasioned unalloyed enthusiasm in the Colonel’s personal entourage.” Baruch, however, was not without resources and qualifications—among other things, he was the President’s friend, the largest contributor to the Democratic National Committee in 1918, and an experienced traveler in Europe—and soon he won appointment to the Reparations Commission. His American colleagues on that key body were Norman H. Davis, the senior US financial adviser, and Vance McCormick, chairman of the War Trade Board and formerly the Democratic Party’s chief fundraiser.
Paris that January was filled with statesmen and their seconds and all manner of staff and miscellaneous persons ostensibly making peace. The most terrible war in history was over, but the Armistice had brought fractiousness, influenza, and Bolshevism. Europe was prostrate: Germany hungry, northern France ravaged, everyone war weary. Onto this bare stage strode Woodrow Wilson, speaking to the galleries over the heads of governmen
ts to promise “Peace without Victory.” The people were thrilled by the President and he by them, so that at first the fact was overlooked that on different sides of the Atlantic peace meant very different things. In Europe there was admiration for Wilson and tolerance for his Fourteen Points and League of Nations but also a deep and un-Wilsonian hunger for booty. As the people cried “Vive Wilson!” in Paris, the placards read, “Que l’Allemagne paye d’abord”—Let Germany pay first. In the Chamber of Deputies, Louis-Lucien Klotz, the Finance Minister, brushed aside concerns over the financing of the French war debt with assurances that the bill would be paid in reparations instead of in taxes. In Britain, a political slogan was coined: “Squeeze the lemon until you can hear the pips squeak.” America, which had entered the war late, suffered relatively few casualties, and emerged as Europe’s creditor, said that it wanted little or nothing for itself. For its allies it asked a fixed and reasonable sum of reparation (as opposed to the indefinite and unreasonable claims then being heard from the British and the French). It was to advance this line that Baruch, McCormick, and Davis took their places on the Reparations Commission.
Baruch accumulated other assignments. He was appointed to the Committee on Form of Payments of Reparation and the Subcommittee on Measures of Control and Guarantee. He was a member of the Supreme Economic Council and of the American Delegation to the Preliminary Peace Conference. He served on the Special Committee on Food, Credit, and Raw Materials, the Committee on Economic Clauses, the Committee on Reparations (with respect to Austria, Hungary, and Bulgaria) and the Economic Drafting Committee. The drafting work, in particular, promised to be exacting and arduous. Always a believer in having enough technical help, he began to collect staff. The War Industries Board’s Paris office placed itself at his disposal. In February, in answer to a call he had issued for reinforcements, five more men booked passage from America to France. On St. Valentine’s Day the President handed him $150,000 “for the purpose of creating and maintaining such organization, supplementary to that maintained by the American Commission to Negotiate Peace for the carrying forward of its other activities, as said Bernard M. Baruch may find necessary.”[34]
As an adviser with his own fast-growing advisory staff, Baruch naturally required offices. He arranged for the acquisition of three floors at No. 10 Rue Pauquet, space that had been previously assigned to Herbert Hoover, the dynamic relief commissioner. Inasmuch as the main body of the American delegation was housed at the Hotel Crillon, there was also need of transportation. This demand was filled by the State Department motor pool, which turned over three cars for the exclusive use of Baruch and his staff. (That spring, when his entourage too was consolidated at the Crillon, Baruch received a crisp note from the Department’s administrative aide, Joseph C. Grew, asking that he surrender his automobiles.)
He was one of five American economic advisers in Paris, a team that also included Hoover, McCormick, Davis, and Henry M. Robinson, a cherub-faced California banker. Thomas W. Lamont—the Morgan partner who would utter the famous Black Thursday understatement, “There has been a little distress selling on the Stock Exchange . . . ”—recalled in his memoirs that Baruch had been a kind of roving ambassador, undertaking numerous jobs and enjoying the President’s complete trust. It was almost inevitable that the five (or six, counting Lamont) would vie for presidential attention, and that Baruch would prove a resourceful competitor. One day, in unusual circumstances, he pitted himself against Hoover. On the day in question Baruch was riding in an automobile with Rear Admiral Cary T. Grayson, Wilson’s naval aide and personal physician, and with Edith Helm, Mrs. Wilson’s social secretary. Their car was the fifth or sixth in a caravan that was touring the devastated regions of Belgium with President and Mrs. Wilson and the king and queen of Belgium. Protocol dictated the order of travel, with the royal car first and junior officials bringing up the rear. Just ahead of the Baruch-Grayson car was one in which Hoover was riding. Mrs. Helm related:
We went along at what seemed like breakneck speed—motors did not run smoothly as they do now. As we were dashing along, Mr. Baruch leaned over to the chauffeur, showed him a hundred-franc, note and said, “If you can get ahead of that next car and stay ahead, you will have this.”
Of course that was enough. We dashed ahead, nearly demolishing a dog on the way, and we stayed ahead. And for some strange reason, Mr. Hoover apparently thought I was responsible, because after the state dinner that night he came up and asked my official rank. I replied that I had none—I had only a clerical position with Mrs. Wilson. He said nothing more. . . .
Baruch and Hoover necessarily saw a lot of each other in Paris, but the contact failed to foster a close mutual understanding. At another dinner party Baruch watched as Hoover, flanked by beautiful women, stared distractedly at his plate. Baruch, who was as loath to squander an opportunity to engage the opposite sex as the relief director was to waste food, afterward asked him how he could have ignored such charming companions. Hoover didn’t seem to understand the question.
Despite the inevitable clashes of ambition and personality, the Americans were united on the basic economic issues before the conference. Concerning wartime economic controls, they urged a general relaxation and a return to something as close as practicable to free trade. (“The removal, so far as possible, of all economic barriers . . .” was, indeed, the third of Wilson’s Fourteen Points.) Baruch, who in wartime had been all for controls, after the Armistice declared himself for free markets. In a memorandum that he handed the President in December, he made the free-trade argument from the point of view of the individual:
A just and continuing peace should include a just and equal access to the raw materials and manufacturing facilities of the world, thus eliminating preferential tariffs. No nation, including neutrals, should be permitted to enter into economic alliance, to the detriment of any other nations. . . . The individual within each nation will thus have an opportunity through ingenuity and application to work out his own salvation.
The longer he sat in committee meetings, the deeper ran his conviction that government policy, especially policy toward Germany, which was still blockaded, was crippling the world. As his frustration rose, an undiplomatic edge crept into his voice. It was audible on April 16, for example, at a meeting of the Raw Materials Section of the Supreme Economic Council, which he happened to chair. The committee was in receipt of a request that had been forwarded from Germany by General Foch for thirty-six tons of wool. Should it be shipped? If so, would an unwanted precedent be set for the movement of other commodities into German hands? “We are all talking about 36 tons of wool,” said Baruch. “You can take it and put it in the corner of your eye. What reason is there for discussing the matter of 36 tons of wool[?]’’ Still the discussion continued. At length, apropos of coal, Baruch said:
I say again that I think the coal and the transportation situation is the gravest one we have in front of us. We have formed committees and we have done nothing. The world will never excuse us for not doing it. It can be done only by mutual self-sacrifices and it cannot be done by everyone holding on to his little pile. This thing has to be done wholeheartedly and I would not give one penny to any nation that would not come through and work the situation out to the mutual benefit of all concerned.
With this a British delegate said he concurred. Later on talk turned to the blockade and to a suggestion that the committee consult another committee about the movement of goods to Germany. Baruch could hardly contain his exasperation, and his words tumbled out:
The whole subject was brought up and it was suggested that I should be a member of that Committee and I refused to discuss it until we resolve that we will take down the blockade and the frightful unnecessary control of the mails, etc., but it has not been done and I would not sit on a Committee to discuss these things until we do the things which are stopping these things. They have no mail service, no telegraph service, and have no way of communicating with the outside world and if they had all the
money in the world they could not do so. We have it in our power to stop this and we do nothing toward it.
It was suggested that the Blockade Committee, which was meeting upstairs, would decide. Baruch was not encouraged:
I have been here for ninety days and we resolve to do something and then turn it over and over. We say we should open up the blockade etc., and then we make it impossible. I say: let us bend our energies in undoing this tangle, rather than discussing it and making resolutions. . . . If you would allow people to communicate freely in these Balkan States the industries would get in touch and would do a great deal better than our Governments. Our Governments have everything so tied up that nobody is able to move.